Industry Warned That Raising Employment Taxes Would Drive Youth Unemployment – This Week’s Figures Prove It

The Night Time Industries Association (NTIA) has responded to today’s confirmation that inflation has fallen to 3%, following Monday’s release of youth unemployment figures showing a rise to 16% – the highest level in over a decade.

Michael Kill, CEO of the Night Time Industries Association (NTIA), said: 
“Inflation falling to 3% is welcome in principle, but that is not the real story this week.

Overall UK unemployment now stands at 5.2%, signalling a cooling labour market. But beneath that sits a far more alarming statistic: youth unemployment has risen to 16.1% at the end of 2025, the highest level since 2014.

Analysis from the Resolution Foundation shows that UK youth unemployment is now higher than the EU average for the first time since comparable records began in 2000. These are not minor fluctuations – they are structural warning signs.

As an industry, we were unequivocal in our warnings to Government. We made clear that raising the cost of employment, particularly through increased employer National Insurance Contributions, alongside consecutive National Minimum Wage rises and wider tax burdens, would disproportionately impact entry-level roles and youth employment.

We said that increasing employment taxes during a fragile economic period would dampen hiring appetite, force businesses to streamline, and reduce opportunities for young people.

This week’s figures confirm that outcome.

No responsible employer opposes fair pay. Businesses want to reward staff properly and sustainably. But wage increases and tax rises must be aligned with economic reality and sector capacity. When employment costs rise faster than productivity or revenue growth, businesses are left with little choice but to slow recruitment, restructure, or reduce headcount, and entry-level roles are often the first affected.

The irony is stark. The cost of employing young people increases through tax and wage mandates, youth unemployment climbs to a decade high, and months later schemes are introduced to bring young people back into work. Public funding is then deployed to address consequences that industry bodies clearly forecast.

Alongside this, the introduction of the Employment Rights Bill brings further compliance pressures, added risk and reduced flexibility for SMEs and labour-intensive sectors, precisely at a time when business confidence is fragile.

Inflation at 3% may appear reassuring at a macro level, but it will not immediately translate into relief in people’s pockets. For many households, the cost of living remains acute. When a record number of people are out of work, daily financial pressures do not ease simply because the inflation rate has moderated.

For the 5.2% currently unemployed, and especially the 16.1% of young people locked out of the labour market, the economic reality remains harsh.

Policy must be judged not just by headline economic indicators, but by whether it creates sustainable employment and genuine opportunity.

This week’s data should prompt serious reflection. Policy works best when it is shaped with industry, not imposed upon it. If we are serious about growth, confidence and youth opportunity, that principle must now guide the decisions ahead.”