According to the Institute for Employment Studies (IES), the proposed hike in employer’s national insurance contributions will have a relatively small impact on the permanent employment market in the UK.
Under a Labour government, employers, limited company contractors and umbrella companies will see a 1 per cent increase in the amount of national insurance they are asked to pay, proportionate to their employee’s gross weekly or monthly salary.
Several leading recruitment bodes, including the REC, have already voiced their concerns to the government and a recent study by the Chartered Institute of Personnel and Development has suggested that recruitment could decline by as much as 15%, should the planned increase in NIC take effect.
However, the IES explained that while employers may not necessarily like the idea of a rise in PAYE taxes, the 1 per cent increase will have much more of a direct impact on the actual workers themselves, since many firms will simply offset the NIC increase against pay rises and other sundry employment benefits.
The Chartered Management Institute has recently announced the findings of a new study into the effects of the recession on SMEs and the wider employment market. According to the report, nearly half of the respondents feel that their business is still struggling financially following the economic downturn, while two thirds say that the recession has had a damaging effect on staff morale.
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