Government Needs a Pro-Growth Budget to Revive the Labour Market

The Recruitment & Employment Confederation (REC) has submitted its formal response to the Treasury ahead of the Autumn Budget, communicating the concerns and priorities of our members and championing policies that will benefit businesses and workers across the UK. Drawing on our real-time labour market data, this submission provides unique insights into the state of the workforce, offering evidence-based recommendations designed to restore confidence, stimulate investment, and support sustainable growth.

Our data tells a clear story. The UK economy is flatlining. Over the past year, permanent placements have fallen, job vacancies have declined, employer confidence remains weak and pay growth has been muted. Candidate availability is high, yet hiring is constrained by rising costs, regulatory pressures, and economic uncertainty, particularly in sectors such as retail and hospitality. In contrast, construction has benefited from government-backed investment, showing that well-targeted interventions can deliver measurable results. These insights underline the vital role government policy plays in shaping labour market outcomes and the real concerns REC members are experiencing on the ground.

The REC’s submission stresses a simple, universal truth. Without a strong and sustainable labour market, the UK cannot deliver the growth it needs. Employers are hesitant to invest in hiring and training when uncertainty persists. After years of rising costs and complex regulation, businesses are already operating on tight margins, and further tax increases risk discouraging investment and hiring. Our members’ experience shows that the next phase of economic policy must focus on enabling business growth, not penalising it.

The Autumn Budget is a chance for the Government to take visible pro-growth action. REC members need clarity and delivery, not more promises. That includes clear implementation of the Employment Rights Bill, a freeze on Employers’ National Insurance with the threshold restored where possible and reform of the Skills Levy so employers can invest in training more flexibly. Public sector hiring must be modernised by removing bottlenecks, speeding up decisions, tackling late payments and ending rigid pay caps. Flexible working should be supported as a practical tool to improve outcomes for both businesses and workers.

Government should also end anti agency rhetoric and recognise recruiters as partners in solving staffing challenges, especially in the NHS. Next April’s PAYE liability reforms relating to use of Umbrella companies must be applied fairly so compliant agencies are not forced to carry disproportionate risk. No further cost pressures should be placed on businesses already operating on tight margins. With fair procurement, proportionate rules and stronger collaboration between the public and private sectors, confidence and hiring can both be rebuilt.

Our submission also proposes a practical route to turn strategy into action through a one day summit bringing together business leaders, labour market experts and policymakers. By co-creating sector specific workforce plans, sharing employer experiences, aligning training and recruitment with industrial and infrastructure priorities and identifying opportunities for collaboration, the Government can ensure policy choices are grounded in the realities faced by our members.

By reflecting the experiences of REC members and using data driven insight to guide policy, the Autumn Budget can restore business confidence, unlock investment and create real opportunities for workers. This approach will strengthen the UK labour market, drive sustainable growth and ensure that government decisions deliver long term benefits for both business and society.