Andy Burnham is facing pressure from business groups to reverse recent changes to National Insurance contributions, as new data reveals that British firms' hiring plans have remained at historic lows since last spring. The Chartered Institute of Personnel and Development (CIPD) suggests that these changes have contributed to fragile employer confidence, with just 62 percent of businesses planning to recruit in the next three months.
The net employment balance, a measure of firms' intentions to increase or decrease staffing, stands at +9, indicating a significant slowdown in the labor market. The retail industry has been particularly affected, with CIPD survey data pointing to a potential decrease in staff levels over the coming months.
James Cockett, senior labor market economist at the CIPD, described the current situation as a "low hire, low fire" environment, suggesting the UK labor market has largely ceased to grow. He urged Burnham to reconsider the increase in employer National Insurance contributions from 13.8 percent to 15 percent and to restore the secondary threshold to £9,100. This change, he argued, would encourage the creation of more part-time roles, which are often a starting point for young people entering the workforce.
Additionally, Cockett highlighted proposals from Burnham's administration to alter zero-hour and low-hour contracts, which are projected to cost businesses up to £2.9 billion annually, according to government analysis. These reforms, set to take effect next year, aim to reduce the number of hours employees can work before being offered guaranteed time. However, the CIPD survey indicates that a third of employers plan to increase their use of self-employed workers and potentially implement redundancies as a consequence of these upcoming contract changes, citing concerns about increased administrative and compliance burdens.
The CIPD figures emerge ahead of anticipated labor market data from the Office for National Statistics, which is also expected to reflect a weak employment outlook. Previous ONS data showed a decline in payroll employees and a 4.9 percent unemployment rate. Susannah Streeter, chief investment strategist at Wealth Club, noted that the CIPD survey suggests a continued reluctance among employers to expand their workforces, with a focus on cost control over growth and a significant number of individuals remaining outside the labor market.