The Night Time Industries Association has warned that government tax policy and rising employment costs are directly contributing to higher youth unemployment by discouraging businesses from hiring younger workers.
The trade body, which represents one of the UK’s largest employers of 18 to 30-year-olds, said increases in National Insurance Contributions alongside broader operational cost pressures have created an environment in which recruitment has become increasingly difficult for hospitality and entertainment venues.
The warning adds to growing concern within parts of the hospitality sector that entry-level jobs — traditionally a key route into employment for young people — are being squeezed out as businesses grapple with higher staffing costs and weaker margins.
According to the association, venues operating in the night-time economy are particularly exposed, given their reliance on flexible staffing models, late-night trading and high-volume customer turnover.
It argues that recent tax and wage pressures are disproportionately affecting precisely the types of roles most likely to be filled by younger workers.
Industry leaders say the combination of higher employer National Insurance contributions and increased wage bills has forced many operators to reduce hiring, cut hours or delay expansion plans.
Michael Kill, CEO of the Night Time Industries Association, said: “This government has created its own youth unemployment crisis through a tax system that is fundamentally not pro employment and certainly not pro youth employment.
“The night-time economy has historically been one of the largest employers of young people in the UK, providing essential first jobs, flexible work, training opportunities and long-term careers across hospitality, leisure, live events and entertainment. Yet businesses are now being punished for employing people.
“Rising National Insurance Contributions, escalating wage pressures and relentless operational costs have destroyed confidence in recruitment across large parts of the sector. Employers are being forced to reduce hours, freeze hiring or stop recruiting altogether because the financial risk of taking on staff has become too high.
“The consequence is now clear. Young people are being locked out of the workforce at the very moment they should be building skills, confidence and careers.
“You cannot continue increasing the cost of employment while claiming to support growth and opportunity. Current policy is actively shrinking entry level opportunities and damaging sectors that traditionally employ large numbers of younger workers.
“If the government is serious about reversing rising youth unemployment, it must urgently reduce the tax burden on employers, starting with National Insurance Contributions, and rebuild confidence in recruitment before long-term damage is done to an entire generation entering the workforce.”
They warn that this is having a knock-on effect on youth employment opportunities, with fewer entry-level positions available in bars, clubs, restaurants and live entertainment venues — traditionally some of the first stepping stones into the labour market.
The association said the current trajectory risks deepening what it describes as a structural problem in youth employment, as employers increasingly prioritise experienced staff over trainees or first-time workers.
It comes amid wider warnings from business groups that the cost of employing staff in the UK has risen sharply in recent years, particularly in labour-intensive sectors such as hospitality, retail and leisure.
Critics argue that higher employment taxes are undermining efforts to boost workforce participation among young people at a time when economic inactivity remains a persistent concern.
The government has defended its approach, insisting that tax policy is designed to ensure fiscal stability while continuing to support targeted employment schemes and broader economic growth measures.
Ministers have also pointed to ongoing initiatives aimed at improving skills and training opportunities for young people, arguing that structural issues in education and workforce readiness also play a significant role in youth unemployment.
However, industry figures say these measures will have limited impact if employers are unable or unwilling to create the entry-level jobs that allow young people to gain experience in the first place.
The warning from the night-time sector adds to a growing political debate over the balance between raising revenue for public services and maintaining incentives for job creation, particularly for younger workers entering the labour market for the first time.
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