Hospitality leaders warn of ‘dark clouds on the horizon’ as unemployment rises

The UK unemployment rate rose to 4.9% in the three months to March, while youth unemployment climbed to 14.7% – the highest level since late 2014.

The latest figures from the Office for National Statistics (ONS) come as hospitality leaders warn that rising employment costs are forcing businesses to scale back hiring and cut jobs.

Earlier this year, UKHospitality warned that a whole generation of young workers risked being locked out of employment opportunities as job losses mount across the sector.

ONS director of economic statistics Liz McKeown said sectors such as hospitality and retail had seen “some of the largest falls in vacancies and payroll numbers”, which suggested that employers were slowing recruitment, reducing staff numbers or not replacing workers who leave.

Kate Nicholls, chief executive of UKHospitality, linked the rise in unemployment to higher labour costs and changes to employment taxes, which she said were having a disproportionate impact on younger workers entering the job market.

Hospitality has traditionally acted as a gateway into employment for younger people, with the sector accounting for 37% of first jobs in the UK.

Nicholls added: “The past two Budgets have inflicted more than £5b of additional costs onto hospitality businesses, forcing them to cut jobs, slash hours and scrap plans for new roles.

“Today’s figures are clear evidence that hospitality has been disproportionately affected, as the ONS itself calls out and we warned would be the case.”

“Many people earned their first salary from waiting tables or pulling pints in their local pub or restaurant, so we all know hospitality can be at least part of the solution to this crisis.”

She also warned there were “dark clouds on the horizon”, and cited provisional ONS data for April, which projecting a further 100,000 job losses across the wider economy.

“If the government wants to grow the economy and get people back into work, it needs hospitality’s help,” she said. “Rather than taxing jobs out of the sector, it should reduce our weighty cost burden to allow businesses to create jobs. That should start with a cut to VAT for hospitality and a meaningful reduction in business rates for the entire sector.”

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