Employment is shrinking fastest among young workers, according to data tracking by Employment Hero.

The company looked at 105,000 employees in more than 1,500 small and medium-sized businesses and found a 0.4% contraction in overall employment levels in February. The steepest decline was for younger workers, aged between 16 and 24, of 1.8%.

Younger staff will become more expensive to employ from April, when the new national living wage rate of £12.25 per hour will apply to all workers over 21. Previously, workers between 21 to 23-year-olds were paid a slightly lower rate, but this band has been scrapped.

The findings come soon after it was revealed that the number of young people not in education, employment or training (Neet), rose to almost 1 million in December 2024, according to the Office for National Statistics.

Younger workers

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Employment Hero also found that employment in small to medium-sized companies shrank by 0.3% a month since October, a reflection of caution after the government announced an increase in employer national insurance contributions from April.

This could also disproportionately affect younger, part-time and lower-paid staff as the salary threshold for paying employer NI contributions has been lowered from £9,100 to £5,000.

“Younger employees often require more training and support. Rather than replacing them, many SMEs will simply absorb the extra workload themselves, as they can’t afford the additional strain,” said Kevin Fitzgerald, managing director of Employment Hero.

“If this trend continues, we could see a much more challenging job market emerging in the months ahead, particularly for younger workers trying to get their foot on the career ladder.”

Earlier this month, the Recruitment and Employment Confederation reported that there had been a softer decline in recruitment activity during February, although overall demand for staff remained subdued.

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