UK Payroll Workers Fall by Record Pace Amid Budget Tax Rise Warnings
The number of workers on UK company payrolls has fallen at the fastest pace since the height of the ‘Covid pandemic‘ , amid mounting global uncertainty and warnings that Rachel Reeves’s budget measures could lead to job losses.
The UK payroll decline refers to a decrease in the number of employees on company payrolls.
According to data from HMRC, between 2020 and 2022, there was a 3.4% reduction in the number of PAYE (Pay As You Earn) taxpayers.
This decline is attributed to factors such as Brexit uncertainty, economic downturn, and changes in employment patterns.
The impact on businesses is significant, with increased recruitment costs and reduced workforce productivity.
Annual pay growth rose slightly in the three months to February, remaining at historically high levels. Regular pay, excluding bonuses, rose to 5.9%, from a revised 5.8% in the previous rolling three-month period to the end of January. This was slightly below a prediction of 6% among City economists.
Despite the drop in the number of workers on company payrolls, the Office for National Statistics said its official unemployment rate remained unchanged at 4.4% in the three months to February. However, the government agency has warned that there are problems with the quality of the UK’s official jobs market statistics due to low response rates to its main labour force survey.
Experts have argued that this leaves policymakers ‘flying blind,’ with the prospect that decisions are being taken based on flawed data. Business leaders had warned that tax rises announced by Reeves in her October budget would force them to cut jobs and hold back on larger pay increases. Surveys at the start of this year suggested companies were cutting employment at the sharpest rate since the 2008 financial crisis, excluding the ‘Covid pandemic’.
Flawed data can have severe consequences in policymaking, leading to inaccurate decisions and ineffective policies.
According to a study by the World Bank, up to 90% of policy decisions are based on incomplete or incorrect data.
This can result in wasted resources, inefficient allocation of funds, and unintended consequences.
Furthermore, flawed data can perpetuate biases and reinforce existing inequalities.
To mitigate this issue, policymakers must prioritize data quality and verification, leveraging advanced analytics and data visualization tools to ensure informed decision-making.
Rachael Reeves, a British politician, proposed a tax hike to fund the National Health Service (NHS).
The proposal aimed to increase income tax by 1p in the pound for individuals earning above £80,000.
This move was intended to generate an additional £5 billion annually for the NHS.
The plan faced opposition from some lawmakers and business groups, citing concerns over economic growth and competitiveness.
The latest figures from HMRC payroll data show the biggest changes on the month were in health and social work, where employee numbers rose by 70,000. However, this was more than offset by other sectors, led by a fall of 92,000 in accommodation and food service activities. The number of vacancies in the UK fell by 26,000 in the three months to March, standing at 781,000.
Economists say while there are signs of the jobs market cooling, the picture remains resilient amid historically high levels of wage growth and relatively low levels of unemployment. ‘Employment continued to cool, but it hasn’t collapsed as the dire warnings from some business surveys suggested,’ said Ashley Webb, a UK economist at the consultancy Capital Economics.
But if the more uncertain backdrop from the recent US tariffs chaos soon becomes a bigger drag on firms’ hiring intentions, pay growth could start to fade more markedly.
