Companies that cut jobs prior to rising employment costs

A study by UK employers shows that businesses plan to cut or recruit jobs ahead of rising national insurance payments and wages.

The companies questioned by the Chartered Human Resources and Development Institute (CIPD) said they would raise prices to cover increased employment costs.

Individual studies conducted by the Federation of Small Businesses found that in the last three months of last year, trust among small businesses reached a low point that does not include the symbiotic pandemic for 10 years.

The Treasury said it provides the stability needed for investment and growth.

Similar to the increase in national minimum wage announced in the October budget, the rise in employers’ contributions to National Insurance (NICS) is expected to take effect in April.

A CIPD survey found that over a third of 2,000 companies said they plan to cut down on their employees through redundancy or by recruiting fewer workers.

About 42% of companies said they would raise prices, but a quarter of those surveyed said “they are canceling or reducing plans to invest or expand into their businesses.”

The findings come beyond the latest official employment figures scheduled to be released Tuesday.

Peter Cheese, CEO of CIPD, said these were “the most significant downward changes in employer sentiment we’ve seen in the past decade outside the pandemic.”

“Employing a large number of people is a daily economic sector, such as retail and hospitality, and will be particularly affected by the imminent increase in employment costs.”

The Small Business Federation said trust is falling into a broad sector.

The SME index, which measures intercompany trust levels, has found that SMEs are “prepared for a contraction in business scale in the first three months of 2025.”

These latest warnings join the growing chorus of NIC’s planned growth and complaints about the national minimum wage.

Last month, the UK Chamber of Commerce (BCC) said a survey of almost 5,000 members suggested that confidence had “decreased” to its lowest level over two years.

In November, a group of UK’s biggest retailers warned that job losses on the boulevards are “inevitable”, prices will rise, budget taxes will rise, and other costs will close shops. did.

But some of these retailers claim they can afford to make profits from their bumpers and buy tax increases.

Second, last year, it has earned more than £1 billion and is expected to repeat this. In an interview with the BBC, Next boss Wolfson Lord admitted that he was a “broad shoulder” who argued that businesses like him must bear the brunt of the tax rise needed to rebuild public services.

Starting in April, employers will be required to pay national insurance at 15% on salaries above £5,000, rather than 13.8% of wages above £9,100 at this time.

The government says a rise is needed to fund public services and to fix the “black hole” of public spending plans. It claims to have been inherited from conservatives.

The Treasury told the BBC that “provides a single budget for parliament to clean up slate clean and provide the stability that businesses need to invest and grow, protecting workers’ salaries from higher taxes. , said it has secured more than half of its employers. Looking at the cuts or changes to national insurance bills, we will boost record wages to millions of workers.”

Prime Minister Rachel Reeves consistently defended the budget and made “difficult decisions” but acknowledged it as “the right decision in national interests.”

But it has led to a political line, with the opposition claiming that it will undermine future economic growth and will make businesses less likely to hire workers.

The latest figures from the National Bureau of Statistics (ONS) estimated that the UK’s unemployment rate rose from 4.3% to 4.4% in November.

The latest photos from the job market will be revealed Tuesday. However, ONS recommends treating recent numbers with a “caution” because of low response rates to employment surveys.

The latest inflation numbers measuring the pace of price increases is expected to be released Wednesday.

In the 12 months ending December, prices rose 2.5%, slightly smaller than in November, but still exceeded the Bank of England target.

There is a risk it poses as businesses raise prices in the face of increased employment costs as they increase further in the coming months.

Banks have previously warned that inflation will skyrocket to 3.7% later this year, with its expecting it will take some time to return to its 2% target.

However, on Monday, the Bank of England governor said inflation was slowly slowing.

Andrew Bailey told BusinessLive, the Business News website: “We still have a progressive escape going on. The aftereffects of what happened a few years ago are exhausting, but it’s a progressive process.”

Despite the expected increase in inflation later this year, Bailey said he doesn’t think it’s likely to last for the long term.