UK 
United States
Small business hiring is picking up, but new data suggests the UK labour market is becoming increasingly divided, with employers shifting towards full-time roles at the expense of part-time work.
While full-time employment rose 1.1% month-on-month and is up 14.6% year-on-year, part-time roles have declined for three consecutive months, disproportionately impacting older workers and women.
At the same time, wage growth remains elevated at 8.8% annually, pointing to ongoing competition for talent despite wider economic pressures and rising operating costs.
The findings come from Employment Hero, a global leader in HR, hiring and payroll software, in its March Jobs Report which tracks real-time employment and wage growth in the UK, based on data from over 125,000 employee records within small businesses. While hiring among small businesses has continued to recover, the latest data reveals a clear split between full-time and part-time roles.
A polarised labour market as SMEs choose long-term stability
Growth in full-time employment among small businesses rose 1.1% month-on-month in March, while part-time roles contracted for the third successive month, down -0.5%. Amid growing competition for talent and legislative changes, this suggests employers are prioritising stability, with the jobs market becoming increasingly polarised between full-time and part-time roles.
This shift is not impacting all workers equally. While part-time roles are often associated with younger workers, ONS data shows they are disproportionately held by older generations and women. As a result, the contraction in part-time work is falling hardest on these groups.
Month-on-month, part-time roles declined most sharply among older workers. Boomer employment fell by -6.2% in March, compared to -2.7% for Gen X and -1.3% for Gen Y, while Gen Z saw a 5% increase.
The disparity is even more pronounced when looking at gender within older age groups. Among Boomer workers, part-time employment is down -4.3% year-on-year for women, while rising slightly by 0.4% for men. This suggests the ongoing contraction of part-time roles risks disproportionately excluding older women from the workforce.
Over the longer-term, the data paints a more positive picture. While part-time employment only grew 3.3% year-on-year in March, full-time roles are up 14.6%.
This commitment to hiring amid a host of external pressures, including the Employment Rights Act, demonstrates the resilience of small businesses. However, while there is clear momentum, employment growth remains well below pre-April 2025 levels.
Elevated wages
The large spike in year-on-year wage growth recorded in February has held steady at 8.8%. In the current economic climate, where rising inflation is eating into take-home pay, this suggests employers are competing on wages to attract talent. Given the broader increase in operating costs for small businesses, it is unclear whether this rapid growth is sustainable.
While wages remain elevated over the longer-term, Employment Hero data shows a month-on-month decrease of 1.1% in March. Wage growth in the North of England was hardest hit, down 2.6%.
Kevin Fitzgerald, UK Managing Director at Employment Hero said: “The headline is that employment growth is recovering, but the reality for small businesses is more complex.
“Beneath the surface, the labour market is quietly restructuring, with part-time and full-time roles moving in different directions. This is no coincidence. With the Employment Rights Act now in force, employers are making calculated choices about workforce composition and prioritising stability.
“The resilience of SMEs is clear, but it’s coming at a cost. Rather than scaling hiring, many are becoming more selective - a shift that could reshape who gets access to work in the months ahead.”
