Vacancies at the UK’s smallest employers dropped 21.1% in the three months through September, putting hiring costs in focus ahead of Chancellor John Healey’s Oct. 28 budget.
The Office for National Statistics (ONS) estimated 77,000 openings at firms with one to nine employees, 21,000 fewer than in April through June. Its separate estimate for the UK as a whole was 691,000 vacancies, also down a rounded 21,000. Vacancies changed in other employer-size groups, so the two reported declines do not mean the smallest firms accounted for the entire national fall.
The UK total fell below 700,000 for the first time since 2021. The ONS cautioned that the 21,000 quarterly change was smaller than the roughly 32,000-vacancy margin around its national estimate. Among firms with one to nine employees, the vacancy count was the lowest outside the pandemic period since June through August 2013.
Responses to the ONS vacancy survey suggest higher labor costs may be discouraging some smaller companies from recruiting. The survey feedback offers a possible explanation for the decline rather than establishing its cause.
In April 2025, the employer secondary Class 1 National Insurance rate rose from 13.8% to 15%, and the annual pay threshold at which employers begin paying it fell from £9,100 to £5,000, HM Revenue & Customs said. The maximum Employment Allowance, which reduces eligible employers’ National Insurance bills, increased from £5,000 to £10,500.
The higher rate and lower threshold increased costs for affected employers, while the larger allowance offered relief to eligible firms. Small and medium-sized enterprises accounted for 60% of UK private-sector employment at the start of 2025, Department for Business and Trade estimates show. The ONS category of firms with one to nine employees covers only part of that broader group.
Antonia Medlicott, founder of Investing Insiders, told The Independent that the larger allowance helped very small firms, but the cost of employing people became more burdensome as a business grew. She urged the government to make expansion and hiring less expensive.
HM Treasury has scheduled the budget for Oct. 28. The ONS is due to publish its next vacancy estimates Nov. 17.
