Hopes for a sustained recovery in UK hiring “hang in the balance” as employer sentiment is hit by concerns over rising payroll taxes and incoming workers’ rights legislation, according to a new report by the Recruitment & Employment Confederation (REC).
In its latest survey released on Thursday, the REC found that while short and medium-term hiring intentions improved in the three months to April, broader economic confidence among employers deteriorated, raising questions over whether a long-anticipated labour market rebound will fully materialise.
The REC’s economic confidence index plunged by 12 points over the quarter to a net minus 35, signalling deepening concerns about Britain’s growth prospects. Meanwhile, the index measuring employer investment intentions also fell, by five points to minus 9.
Kate Shoesmith, deputy chief executive of the REC, said businesses were torn between cautious optimism and mounting risks: “Firms clearly see potential, but they also see risk. While improving hiring intentions suggest a jobs comeback this year, the extent of any bounce back depends on the economic and political headwinds on firms easing a fair bit.”
The hiring outlook improved despite April ushering in two major cost increases for employers. The main rate of national insurance contributions (NICs) rose from 13.8 per cent to 15 per cent, and the earnings threshold at which NICs are paid fell from £9,100 to £5,000. Combined, these changes represent a £25 billion increase in payroll taxes. The minimum wage also jumped by 6.7 per cent last month, adding further pressure, particularly on sectors like hospitality, care and retail which rely on lower-paid, part-time staff.
Support authors and subscribe to content
This is premium stuff. Subscribe to read the entire article.
