‘This must mark the start of a serious effort to consistently bring schools closer to employers’ - REC

Responding to reforms to education and training outlined this morning by the new Prime Minister, the Director of Campaigns at the Recruitment and Employment Confederation (REC), Shazia Ejaz, said:

“This must mark the start of a serious effort to bring schools closer to employers and repair ladders into work for young people. Too often, education and skills policy has been designed at a distance from labour market realities, when employers are best placed to help young people develop the skills and experience needed to succeed.

“Business will welcome the Prime Minister’s commitment to valuing the hard hat as much as the graduation cap. The scale of the challenge means a national effort is needed, with REC research suggesting labour and skills shortages risk costing the UK economy up to £39 billion a year.

“If this approach is to succeed, employers will want to see long-term consistency on apprenticeships and technical education, backed by strong engagement with businesses. Skills policy takes years to bear fruit, so we need generational change here. The focus on technical education is welcome but we will need to see the Growth and Skills Levy work better to incentivise employer investment. A more flexible, modular approach to levy training will help businesses build the skills pipeline.

“Government also needs to engage more openly with legitimate concerns about the cost and practicality of employing people. Our JobsOutlook report published today shows that businesses remain hesitant about hiring, but also that there are gains there for the taking if the new Prime Minister tackles the burdens and costs associated with taking on staff.

“Extending the National Insurance reduction to age 25, as recommended by the House of Commons Work and Pensions Committee, would provide a real shot in the arm. But that addresses only part of the challenge. Greater pragmatism in implementing the Employment Rights Act, particularly on guaranteed hours, is also needed.

“If employers stay cautious about hiring, opportunities for young people will inevitably dry up. A clear plan on National Insurance and a pragmatic approach to employment rights would help turn this morning's vision by the Prime Minister into a programme that works for employers and young people alike.”

Notes to editors

1.     JobsOutlook: Employer survey shows new-look government must turn economic doubters into believers to jump-start the job market, says REC, 28 July 2026

Today’s data shows employers are yet to shake off their caution about the economic outlook in a year marked by political uncertainty at home and the unpredictable conflict in the Gulf. The data points to a widening gap between business confidence and recruitment intentions, suggesting there is scope for stronger jobs growth if the government can inspire more confidence in the economic outlook.

2.     Overcoming shortages - How to create a sustainable labour market, REC

In this report, we show exactly how much damage could be done if we do not step up. We could see a fall in expected GDP and productivity – costing the economy anywhere between £30 billion and £39 billion every year. This figure is just short of the entire current defence budget, or two whole Elizabeth Lines.