The government’s proposed increase in National Insurance Contributions could result in clients not wanting to hire, recruitment agencies finding placements harder to come by and contractors and umbrella companies feeling the effects, according to the Chartered Institute of Personnel and Development (CIPD).
The increase is due to come into effect from 6th April 2011. In his last Pre-Budget Report before the next Election, the Chancellor laid out his plans for an additional half percent on National Insurance Contributions for self employed individuals, employees and employers. These rises will take effect in addition to the extra 0.5% NIC already confirmed for 2010. Employers National Insurance will increase to 13.8%.
New research from the CIPD has shown that more than 10% of UK employers plan to decrease recruitment as a result of the planned 1% increase in NIC, whilst a further 8% said they will relieve staff in order to balance the increased rates.
The CIPD, in collaboration with the British Chambers of Commerce (BCC), is now calling on the government not to introduce any more increases to the cost of employing staff.
Edward Winterton, a recruitment specialist from Bibby Financial Services said that Alistair Darling’s plans will come as a “nasty surprise” to the recruitment industry at a time when it is already suffering as a result of the economic downturn.
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