Labour's National Insurance Hike Puts 300,000 Young Hospitality Jobs at Risk, Industry Warns

Labour's National Insurance (NI) policies are jeopardizing approximately 300,000 hospitality jobs annually for young people, according to a warning from the trade body UK Hospitality. The organization is calling on the government to alleviate the tax burden at the upcoming Budget, stating that previous increases have already cost the sector over £5 billion.

UK Hospitality highlighted that the sector has seen 100,000 jobs lost in the past two years following former Chancellor Rachel Reeves's decision to raise employer NI contributions. The group is advocating for a progressive increase in the salary threshold for employer NI, aiming to reach £10,000 by the end of the current parliamentary term.

"Hospitality has always been the nation's biggest creator of jobs for young people," said UK Hospitality chief executive Allen Simpson. "A third of all first jobs for under-25s are in hospitality. That job creation superpower has been put in jeopardy over the past two years, with hospitality hit by more than £5 billion in extra costs."

Simpson warned that without government action, the industry's capacity to provide entry-level positions for young individuals will diminish. He also suggested that reducing employment costs could help address the "NEETs crisis," referring to the nearly one million individuals aged 16 to 24 who are not in education, employment, or training.

The concern arises after a significant change in NI policy introduced by Labour. The previous Chancellor raised the employer NI rate from 13.8% to 15% and, more critically, lowered the salary threshold at which the tax becomes due from £9,100 to £5,000. This adjustment made employing low-paid and part-time workers, who are common in the hospitality and retail sectors, substantially more expensive for businesses.

UK Hospitality noted that while the sector currently offers 300,000 job starts for 16 to 24-year-olds each year, this figure is at risk of further decline without intervention to reduce the industry's tax obligations. The organization is specifically requesting a reduction in the NI burden on businesses employing young workers.

This warning comes as Kemi Badenoch, leader of the Conservative Party, recently pledged to support businesses by halving NI contributions for firms employing workers under the age of 25. The hospitality industry, which includes hotels, pubs, bars, and restaurants, was particularly affected by the previous NI hike, alongside the retail sector.