Businesses Plan Job Cuts Amid Rising Employment Costs
As employment costs surge, many UK companies are planning to cut jobs or reduce hiring, according to a recent survey by the Chartered Institute of Personnel and Development (CIPD). This move comes ahead of upcoming increases in National Insurance payments and wages.
Businesses Plan Job Cuts Amid Rising Employment Costs
Key Findings:
- Job Reductions: Over a third of 2,000 firms surveyed by CIPD intend to reduce their workforce through redundancies or limited recruitment.
- Price Increases: 42% of companies plan to raise prices to offset higher employment costs.
- Investment Cuts: A quarter of businesses are scaling back or cancelling expansion and investment plans.
The Federation of Small Business reports that confidence among small firms fell to its lowest level in a decade (excluding the pandemic), with many bracing for a contraction in early 2025.
Upcoming Changes:
From April, employers will face a rise in National Insurance Contributions (NICs) and an increase in the National Minimum Wage, as announced in October’s Budget. Employers will pay NICs at 15% on salaries above £5,000, up from 13.8% on salaries over £9,100.
Economic Implications:
Chancellor Rachel Reeves defends these measures as necessary to fund public services and stabilise the economy, despite opposition concerns about potential negative impacts on growth and employment.
Current Economic Climate:
- The UK unemployment rate slightly increased from 4.3% to 4.4% in November.
- Inflation was at 2.5% in December, with expectations of a rise to 3.7% later this year.
- The Bank of England forecasts gradual disinflation, although inflation is expected to peak temporarily.
This evolving economic landscape presents challenges for businesses and consumers alike, as firms navigate the balance between rising costs and maintaining competitiveness
For HR support navigating these changes, call Tick HR Solutions today on 07745 535 635.