Hiring confidence has collapsed, apprenticeships are being cut and entry-level jobs are drying up — just as around a million young people sit outside work, education or training. The Budget raised pay, but who is actually hiring?
The first rung of the ladder is disappearing
If you are young and looking for your first proper job, the market is moving against you. That is the blunt message of the CBI/Pertemps Employment Trends Survey 2026, published on 13 October.
Only 15% of businesses say they are hiring confidently, down from 24% in 2025. Labour costs are now the number one threat to the competitiveness of the UK jobs market, named by 73% of firms. And the squeeze is landing hardest on the people with the least experience.
More than half of businesses (53%) say cost pressures mean they are offering fewer apprenticeships than they would like. Almost half (44%) say rising recruitment and onboarding costs are pushing them towards experienced hires, cutting entry-level opportunities for young people. Another 45% say they simply do not have the demand to justify creating entry-level roles at all.
Rain Newton-Smith, chief executive of the CBI, put it plainly: “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.”
A million young people locked out
The survey lands against a bleak backdrop. Around one million 16- to 24-year-olds in the UK are now classified as not in employment, education or training. Retailers — traditionally one of the biggest employers of young people — warn that Budget-related costs are making it harder to take young staff on, with around £250 million in extra business rates and £2 billion in employment costs from wage increases.
High street trouble is adding to the pressure. Poundland has filed a notice of intention to appoint administrators, putting around 12,000 jobs at risk. And even for those in work, pay is stalling: only 47% of firms expect to raise pay in line with or above inflation at their next review, compared with 70% in 2024.
The Budget gave with one hand
Chancellor John Healey’s Autumn Budget, delivered on 28 October, did bring help. The National Minimum Wage and National Living Wage both rise by 3.9% in April, at the start of the new tax year. The minimum wage for 18- to 20-year-olds currently stands at £10.85 an hour; the Living Wage for workers aged 21 and over is £12.71.
Twenty million households will also receive a one-off £100 payment towards energy bills, and a temporary VAT cut has been extended until 1 July, cutting the annual price cap by £50.
But the small print is less cheerful. The Office for Budget Responsibility says it expects no growth in real earnings next year, and it has cut its growth forecast for 2027 to 1%, down from 1.6%. When the survey asked firms about an estimated 3.7% rise in the Living Wage to £13.18, 39% said they would offset the cost by raising prices, 29% by reducing employment and 22% by cutting business investment.
A pay rise is welcome. A pay rise in a market where nobody is hiring is a different story.
Still living at home
The squeeze shows up in how young people actually live. The latest official figures show 35% of men aged 20 to 34 were living at home with their parents last year, compared with 22% of women in the same age range.
The Budget did offer one longer-term promise for first-time buyers: a new First Time Buyer ISA launching on 6 April 2029, replacing the Lifetime ISA for new savers, paying a 25% bonus on your final balance — up to £20,000 in total — on deposits of up to £4,000 a year. The penalty for using Lifetime ISA funds on a home worth more than £450,000 has been cut from 25% to 20% from 29 October, so savers now get back at least what they put in.
The Bank of England’s rate rise to 4% is already pushing up borrowing costs.
2029 is a long way off for someone trying to move out next year. But if you are saving, the new account is worth knowing about — and the penalty cut helps anyone already holding a Lifetime ISA.
What you can actually do
The picture is tough, but it is not hopeless. Half of employers told the CBI that cutting the regulatory burden on apprenticeships would make the system work better — so apprenticeships are still on the agenda, and pressure is building to fix them. Big employers are still recruiting: PwC alone has taken on 1,300 graduates this year.
Five moves that help right now:
- Chase apprenticeships, not just jobs. They are under pressure, but they still exist — and they pay you while you learn.
- Apply where experience matters less. Retail, hospitality and care have always been the first rung; they are also the sectors feeling the squeeze, so apply early and apply widely.
- Make your CV prove something. A short course, a volunteer shift, a side project — anything that shows a hiring manager you can be trusted with real work.
- Use the pay rise. When the new minimum wage rates land in April, check your payslip. If you are 18 to 20, your minimum is £10.85 an hour now and rises 3.9% in April; if you are 21 or over, it is £12.71.
- Save where the bonus is. If you are putting money aside for a first home, a Lifetime ISA still pays a 25% bonus — and the penalty for using it on a pricier home has just been cut.
The jobs market is not closed. But the door is narrower than it was, and it is young people squeezing through it.
The bottom line
Firms are cautious, apprenticeships are shrinking and a million young people are outside work altogether. The Budget raised pay — but pay only helps if someone gives you the job. Until hiring confidence comes back, the smartest move is to go where the doors are still open, and to make yourself the candidate a cautious employer cannot ignore.
What do you think — is it harder to get your first job now than it was for your parents? Tell us in the comments.
This article is for general information only and is not financial advice.
