Jobs plunge sends alarm bells ringing
Small business leaders are urging government action following the latest increase in unemployment.
Official labour market figures from the Office for National Statistics (ONS), have shown the unemployment rate rising to 4.7 per cent. On top of that the number of people on payroll has dropped and wage growth has slowed.
Policy chair of the Federation of Small Businesses (FSB), Tina McKenzie, said the figures were “disturbing”.
She went on: “They add to a weight of evidence that if you make it more expensive and riskier to give someone a job, the result will be fewer jobs. More people are already being locked out of opportunities, the benefits bill will rise even further, and the growth and prosperity we so desperately need will become more out of reach.
“Ramping up job taxes, pushing through 28 new bits of employment legislation, and then on top of that mooting a hike in employer pension costs, is not a recipe for job-creation and economic growth.
“Innovative, ambitious and compassionate small employers, who want to grow and create good opportunities for people, are absolutely up against it, with sky-high costs of doing business and a stagnant economy. Ministers should start basing policy-making on real-world evidence
New FSB research has found that twice as many small businesses reduced staff in the second quarter of 2025 (20 per cent) than increased their employee numbers (nine per cent), with similar numbers predicted for the next three months (19 per cent and eight per cent respectively).
Tina McKenzie added: “For the first time in the 15-year history of FSB’s quarterly Small Business Index, more small businesses expect to shrink or close over the next 12 months than the number which expect to expand.
“That’s more than alarming for the economy and the communities up and down the UK in which these hard-working businesses operate.
“Small businesses currently provide more than half of all private sector employment – more than 16 million jobs, in every part of the country. Jeopardising that is not in the interests of workers, job-seekers or the economy.
“There is some very clear writing on the wall. The government must, collectively, take its head out of the sand and read it.
“That includes improving the worst aspects of the planned employment legislation, supporting small employers to make rises in statutory sick pay affordable, and creating the conditions in which it’s attractive for talented, aspirational people to start their own business.”
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