Rising employment costs risk holding back living standards and job opportunities for young people – CBI/Pertemps employment trends survey 2026

Job opportunities for young people risk coming under further pressure as firms become more cautious about hiring and training, the latest CBI/Pertemps Employment Trends Survey 2026 warns ahead of the Milburn Review's final recommendations.  

Only 15% of businesses are hiring confidently, with rising labour costs and employment regulation putting pressure on firms' ability to create jobs and training opportunities, particularly for young people. 

Key Findings: 

• Only 15% of firms are confident about hiring (down from 24% in 2026). 

• Labour costs are the #1 threat to the competitiveness of the UK labour market (73%). 

• Over half of businesses say that wider cost pressures mean they're offering fewer apprenticeships than they'd like to (53%). 

• Employment regulation is the #2 risk (72%), with 4 in 5 businesses reporting that the Government's Make Work Pay plan is unaffordable without negatively hitting growth, investment, jobs or other employee benefits. 

Youth Jobs and Skills Pressure 

The squeeze on hiring and training risks being felt particularly strongly by young people, as rising labour costs leave firms with less headroom to create entry-level roles. These pressures are also constraining investment in workforce training and limiting opportunities for existing employees to develop new skills and progress. 

• 44% of businesses say rising recruitment and onboarding costs are pushing them towards experienced hires, reducing entry-level opportunities for young people. 

• 4 in 10 businesses (45%) reported that they do not have the demand to justify creating additional jobs for entry level roles.   

• Half of employers (50%) say cutting the regulatory burden on apprenticeships would make the system work better for their business, helping firms create more routes into work.

• More than a third of businesses (35%) say cost pressures are squeezing training budgets, leading them to recruit people who need no additional training for entry-level roles. 

UK Competitiveness and Investment Attractiveness Suffering 

Rising labour costs and increased employment regulation are adding to the pressures on the UK's competitiveness and attractiveness to investors limiting business growth at an already challenging time for the economy. 

• Just 1.7% of businesses say the UK labour market has become a more attractive place to invest and do business over the past five years. 

• Almost two-thirds of businesses (65.3%) say the UK has become much less attractive, while nearly four in five (79%) expect the position to worsen without action to improve competitiveness. 

Rising Employment Costs Impact on Living Standards 

Rising employment costs continue to affect living standards and people's pockets as growth stalls, hitting job opportunities, pay rises, and pushing up prices.  

With employers' National Insurance contributions now the biggest cost pressure, and with costs set to increase again when the next minimum wage rate takes effect in April, firms are forced to make difficult choices including scaling back on critical investment as well as jobs and training opportunities and real wage growth. 

• In response to the estimated 2027 increase by 3.7% to the National Living Wage up to £13.18- 39% of firms expect they'll need to offset these costs by raising prices, 29% by reducing employment and 22% by cutting business investment.  

• Only 47% of firms expect to increase pay rates in line with (or above) inflation at their next review, compared to 70% in 2024. 

Rain Newton-Smith, CBI CEO, said: 

Britain's businesses want to invest, grow and create good jobs, but these findings are a clear signal that the cost and confidence equation in the labour market needs to change. 

Higher employment costs and growing regulatory pressures are making firms more cautious about hiring and investment. That matters not just for businesses, but for living standards and particularly for young people trying to get their first foot on the career ladder. 

The good news is that this is not irreversible. Government can use the upcoming Budget to rebuild confidence by giving firms greater certainty over future employment costs, ensuring regulation supports rather than inhibits hiring, and working with business to bring down the cost of creating jobs. 

Get that balance right and firms will have more of the headroom they need to invest in people, raise wages and create the opportunities that will drive growth.  

Carmen Watson, Chairperson of Pertemps, said: 

Across the employment market, businesses are becoming increasingly cautious about recruitment. Employers still want to grow and invest in their people, but rising employment costs, subdued demand and continued uncertainty are putting greater pressure on decisions around hiring, pay and workforce investment. 

The consequences are being felt across the workforce and by jobseekers at every stage of their careers. When employers have less confidence and less headroom to recruit, opportunities narrow, pay progression becomes more difficult and investment in skills and training can suffer. More than half of businesses say they are offering fewer apprenticeship opportunities than they would like, while 44% feel pressure to prioritise more experienced hires. While this presents a particular challenge for those taking their first steps into work, the wider impact affects people of all ages looking for new opportunities, career progression, or the chance to develop new skills. 

Businesses want to invest in their people and build the skills they need for the future, but confidence remains fragile. Creating the right balance between employment costs, regulation and practical support will be essential to giving employers the confidence and headroom to recruit, invest in skills and create meaningful, sustainable employment for people at every stage of their working lives. 

Matthew Percival, CBI Future of Work and Skills Director, said: 

Businesses support ensuring that work is fair, but the Employment Rights Act and wider Make Work Pay reforms are adding cost and complexity at a time when businesses can least afford it. Some of the most important details of these new rules are yet to be decided and getting this right is a chance to start building the confidence that businesses need to hire and invest."   

13 October 2026 

Notes to Editors: The Employment Trends Survey was conducted between August and September 2026 with a total of 682 firms responding. 

All figures quoted exclude D/K unless otherwise stated.  

• Over half of businesses (including Don't Know/Not Sure' responses) say that wider cost pressures mean they're offering fewer apprenticeships than they'd like to (53%).