Monday 16 February 2026 3:48 pm  |  Updated:  Tuesday 17 February 2026 11:39 am

Jobs figures show Labour has abandoned growth

By: Callum Price

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A staggering 37 per cent of businesses surveyed by the Chartered Institute of Personnel and Development said they planned to reduce hiring permanent staff as a result of the Employment Rights Act, says Callum Price

If we believe that a government is what it does, not what it says, it would be difficult to argue that this government has even a passing interest in growth – never mind it being a top priority. Almost every action, piece of legislation, or announcement either completely ignores growth as the most pressing issue facing the UK, such as banning social media for under 16s or consulting on vape bans, or actively works against it, such as tax rises on businesses and their much-loved Employment Rights Act.  

That is to say: much loved by unions, not so much by businesses. Today we have seen the latest in a long line of business surveys that suggest Rachel Reeves’ ‘smoked salmon offensive’ with business leaders was less ‘Allied forces into Normandy’, and more ‘first day of the Somme’. A staggering 37 per cent of businesses surveyed by the Chartered Institute of Personnel and Development said they planned to reduce hiring permanent staff as a result of the Employment Rights Act.  

This is on top of a plethora of other surveys that found three quarters of businesses declaring that the bill will hurt growth and overall business confidence collapsing across the board.  

But it is not just surveys that tell us this story. The results of government action on the labour market are increasingly clear in the data. The latest figures showed the unemployment rate for all workers at 5.1 per cent, markedly higher than in recent non-Covid years, and even higher for young people.  

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Personal recession

Zooming out, it was just last week that the growth rate for 2025 was measured at a measly 1.3 per cent, and on a per-capita basis actually fell in the final two-quarters of the year. The ‘personal recession’ is officially on. This is lamentable for a government that has been so keen to point out how much it values growth. But don’t worry, the Prime Minister believes that ‘we are headed in the right direction’. One dreads to think what the wrong direction looks like.  

The first rule for any government looking to solve Britain’s growth problem should be ‘first, do no harm’. Unfortunately, that is exactly what the Employment Rights Act does. My colleague, Professor Len Shackleton of the Institute of Economic Affairs, has charted the effects of restrictive employment rights on the labor market extensively. He takes aim at the individual measures in the ERA for mounting costs on businesses through excessive red tape, and argues that the costs of the Act, estimated to be over £5bn by the government, will be borne by workers like any stealth tax.  

He also points out how the extra powers given to unions may lead to longer and more frequent strike action, but that even if they do not, the cost of avoiding strikes – to both the private and public sector – will increase. No wonder businesses are not entirely happy.  

The fundamental problem is, as Wes Streeting put it, the government has no growth strategy. They do not even seem to understand where growth comes from. Their basic belief was that by not being the Tories, they would bring ‘stability’ to government, that would in turn boost growth.  

There are just two issues with this approach. Firstly, they haven’t delivered on the stability front, as anyone who still has a job inside Number 10 could attest. The second and bigger issue is that it forgets the middle-step. Stability only helps growth if it helps boost business confidence, making them more likely to invest here rather than elsewhere. The private sector is the engine of growth, so government should be looking at how to help businesses do what they do best: innovate, hire, produce, and grow. Unfortunately, they keep doing the opposite.  

Callum Price is Director of Communications at the Institute of Economic Affairs

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Employment Rights Act set to stall hiring, says report

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