Andy Burnham is facing renewed pressure to reverse changes to employer National Insurance contributions, as new data indicates British firms' hiring plans have remained at historic lows since last spring. The Chartered Institute of Personnel and Development (CIPD) has urged the Prime Minister to reconsider the policy, which they suggest has contributed to fragile employer confidence.
The CIPD survey reveals that only 62 percent of businesses intend to recruit over the next three months, with private sector hiring intentions at one of their lowest recorded levels. The net employment balance, a measure of firms expecting to increase or decrease staffing, stands at just +9.
The retail sector appears to be particularly affected. Data from the British Retail Consortium indicates that staff levels are expected to fall in the coming quarter, having already reached a record low.
James Cockett, senior labor market economist at the CIPD, described the UK labor market as having "largely stopped moving." He stated, "Hiring has weakened, but redundancy levels haven't risen, leaving us in a 'low hire, low fire' environment that's increasingly looking like a new normal."
Former Chancellor Rachel Reeves increased the employer National Insurance contribution rate from 13.8 percent to 15 percent and lowered the secondary threshold to £5,000. Cockett recommended that Burnham reinstate the threshold to £9,100, arguing it would encourage the creation of more part-time roles, which are often entry-level positions for young people.
Concerns were also raised about Burnham's proposed reforms to zero-hour and low-hour contracts, which are anticipated to cost businesses up to £2.9 billion annually, according to government analysis. These reforms aim to reduce the number of hours employees can work before being offered guaranteed time.
The CIPD survey indicates that one-third of employers are considering increasing their reliance on self-employed workers and implementing redundancies in response to these upcoming contract changes, which are slated to take effect next year.
This data emerges ahead of the release of key jobs figures, which are expected to reflect a weakened labor market. Previous Office for National Statistics data showed a decrease of 85,000 in payrolled employees by May, with a further decline of 71,000 by June. Unemployment was recorded at 4.9 percent.
"The latest CIPD figures suggest there may not have been much of a turnaround since that ONS snapshot, with employers still reluctant to open the hiring taps," commented Susannah Streeter, chief investment strategist at Wealth Club. "The survey points to a labor market struggling to regain momentum, with businesses prioritizing cost control over expansion and too many people remaining on the sidelines. Revitalizing employment and jolting stubbornly high inactivity levels back into reverse will be a major test for the new Burnham administration."