Jobs Market

Question

15:07:00

Asked by

To ask His Majesty’s Government what assessment they have made of the jobs market, and of the implications for the wider economy.

My Lords, this Government’s No. 1 mission is to grow our economy. We want a thriving, inclusive labour market with more people in good jobs, high living standards and productivity growth in every part of the country. The employment level has risen by 600,000 since the election, and we mean to go on as we have started, delivering our planned reforms to provide people with the work, health and skill support they need to succeed.

My Lords, we all regret the current upward trend in unemployment. As the evidence shows, when economic growth returns, only a flexible labour market will deliver that much-needed jobs dividend. What assessment have the Government made of the likely impact of the Employment Rights Bill on the flexible labour market we all need?

My Lords, I have enjoyed debating with the noble Lord, Lord Hunt of Wirral, over too many days to recall, the merits of the Government’s Employment Rights Bill. To be clear, the plan to make work pay is a once-in-a-generation transformation of our labour market to make it fairer and more inclusive, and to deliver the day one rights the country needs. It will introduce ground-breaking reforms such as bereavement leave for those who suffer miscarriages, ensure fair pay for the social care sector, and ban the use of NDAs in cases of sexual discrimination and worse. Let us be clear: we are also repealing the previous Government’s failed trade union legislation, which delivered for this economy record levels of days lost to strikes in 2022 and 2023—a record they cannot be proud of. We are fixing their mess by introducing the Employment Rights Bill.

My Lords, concerning changes to the jobs market, changes to the skilled worker visa mean that public sector workers, including prison officers, can now face deportation because the salary threshold has jumped over their wages—which ignores why we wanted them here in the first place. Therefore, will the Minister make the case to the Home Office that prison officers should be exempted from this arbitrary limit and that their employers should also help to pay their legal costs?

My noble friend makes a very strong point. He will be aware that in the recently published immigration White Paper, the Home Office outlined the steps it is taking to reduce net migration while supporting the labour market across all sectors. On the part of the DWP, my department will play a key part in this work, sitting, as a member of the new labour market evidence group, alongside the Migration Advisory Committee, the Industrial Strategy Advisory Council, Skills England and the relevant devolved skills bodies. I am sure that that will address the concern my noble friend has outlined.

My Lords, what assessment have the Government made of how far the increase in employers’ NICs in April 2025 led to a further switch-out of regular employment into contract work or self-employment as a means of employers avoiding employers’ NICs? There is some evidence that this has been happening, and it is bad news for the public purse, as contractors pay a lot less in NICs and individual workers miss out on all the standard employment rights, including workplace pensions, paid holidays, sick pay et cetera.

The noble Lord will be aware that in the Employment Rights Bill we are undertaking a sector-wide, labour force-wide reassessment and review of employment status that will take into account employment, freelance, self-employment and contracted status. I understand the question. Going back to the original point of the noble Lord’s question, we had to take some very difficult decisions as a Government upon coming into office and finding the £22 billion black hole legacy.

Oh!

Noble Lords opposite may groan and sigh, but I am afraid the fact is that we cannot, in a year, undo the damage they did to the economy and the public finances in 14 years. We absolutely have had to take some difficult decisions on national insurance, but we have also taken steps to support employers to hire, including the smallest businesses, by doubling the employment allowance and launching a new employer commitment that sets a minimum service standard for employers working with Jobcentre Plus to fill vacancies. We have engaged with key growth sectors and industrial strategy sectors and have added 151 new employers to our portfolio. This is just a start, but it is going to be a long journey to undo the damage that the Benches opposite did to our country and our economy.

My Lords, since the Chancellor announced the £25 billion hike in employers’ national insurance, we have seen the number of people on the PAYE payroll fall in seven of the past eight months, vacancies, especially for SMEs, declining every month and, most worrying of all, GDP per capita and labour productivity both falling. How much more evidence do the Government need before facing up to the fact that raising NICs is not only damaging the employment prospects of the so-called working person but has effectively destroyed that much-vaunted mission of delivering the fastest rate of economic growth in the G7?

My Lords, I appreciate what the noble Lord says, but employment in the UK is at a record high—more than 34 million in March to May 2025. The number of jobs in the economy is at a record high; there is a record number of women in employment; and the proportion of 16 to 24 year-old NEETs has fallen in this quarter and, indeed, in the whole year. We are fixing the damage that the party opposite did to our economy, and we intend to continue that journey.

My Lords, feedback from the latest quarterly ONS vacancy survey for April to June suggests that some firms may not be recruiting new workers or replacing workers who have left, and growth decreased in 14 out of the 18 industry sectors. It is alarming that the largest decrease in vacancies was in the construction sector—31.9%, falling by 14,000 on the quarter. The Minister talks about growth, but when is it going to start, and when is housebuilding going to start in earnest? The 1.5 million houses to be built by 2029 looks like a distant dream.

The noble Viscount will be aware that in March, the Government announced the new Construction Skills Mission Board, which has already met. It will help to ensure that employers are able to work collaboratively to secure the workforce they need to meet future demand, and to build the houses we so desperately need. Our department is working closely with MHCLG and across government to support the delivery of the Government’s commitment to build 1.5 million homes this Parliament. I should add that we are introducing foundational apprenticeships, which will be underpinned by an employer incentive payment to contribute to the extra cost of supporting someone at the beginning of their career. So, whether it is young people going into the workforce or into construction, or the delivery of the housing we need, we have a plan and we are working to it.

My Lords, the Institute of Student Employers has found that in 2023, there were an average of 140 applicants per graduate role, the highest in over 30 years. What specific initiatives are His Majesty’s Government supporting for the creation of more graduate jobs outside London?

My Lords, as part of the Get Britain Working plan, we are ensuring that there are local growth plans across the economy, because we recognise that different labour markets have different needs, and different populations in the different areas, regions and indeed nations of our country have different profiles and skills levels. We are determined to get the whole country working through a number of different ways, including reforming Jobcentre Plus and creating a new service across Great Britain, bringing together Jobcentre Plus with the National Careers Service in England so that we can move from box-ticking to job-finding.

My Lords, did not the previous Government leave us with a legacy of poverty pay and a lack of training in the workforce, meaning that we have plenty of vacancies but not the skills to fill them? Is that not a disgrace?

Of course my noble friend is utterly right. [Laughter.] Noble Lords opposite laugh, but this is no joking matter. One year in, and we are still uncovering the damage they did to our economy. We are making progress, and we will continue to do so. I repeat: employment and real earnings are up, economic inactivity is down and our economy is going in the right direction. That is why, under this Government, unlike the last, we are the fastest-growing economy in the G7.