Services sector cuts jobs at steepest rate in nearly four years
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Service industry employment fell at its fastest pace for almost four years at the end of 2024 as bosses reacted to weaker demand and increased payroll costs. The closely-watched S&P Global UK Services Purchasing Managers' Index (PMI) shows December's fall in staff numbers was the largest since January 2021.
Excluding the years distorted by the Covid-19 pandemic, it was the steepest fall for over 15 years. The monthly survey found 23 per cent of respondents reported a drop in workforce levels, compared to 12 per cent who had indicated a rise. The S&P noted service businesses 'widely commented' on hiring moratoriums or not replacing leavers because of higher employee costs.
In October, Chancellor Rachel Reeves revealed employers would pay a 15 per cent National Insurance levy on staff salaries exceeding £5,000 from April, instead of the current 13.8 per cent rate on wages above £9,100. S&P said there was 'anecdotal evidence' of client confidence decreasing following the announcement of a forthcoming uptick in NI contributions.
Letting go: Service industry employment fell at its fastest pace for almost four years in December owing to weaker demand and increased payroll costs. Reeves further declared that the National Living Wage would go up by 77p to £12.21 per hour, while the National Minimum Wage for 18 to 20-year-olds would soar by 16.3 per cent to £10 per hour.
