Subdued hiring strengthens case for Chancellor to reverse employer NICs threshold, says the CIPD

Responding to today’s ONS labour market figures, Neil Carberry, chief executive of the CIPD, the professional body for HR and people development, comments: 

“After two years of decline, labour market activity has turned a corner on the back of better growth. But we mustn't mistake stabilisation for strength: unemployment and employment are flat, and inactivity is barely moving. 

“Vacancies have dropped below 700,000, their lowest level since 2014 outside of the pandemic, which is a sign of muted employer demand. It’s clear that small businesses are struggling to hire and grow, squeezed by rising labour costs and changes to employment legislation. 

“All of this points to an employer base that is surviving but not yet thriving.  

“In next week’s Budget, employers will want the Chancellor to avoid further harm to this fragile ecosystem. The Government must look at ways that help firms feel confident to invest in their workforces, reduce inactivity, and boost economic growth.  

“That means starting to raise the secondary National Insurance Contributions threshold back towards its previous level and pausing plans to equalise the youth minimum wage rate with the adult rate, at least temporarily. Beyond this, Government needs to rediscover its willingness to work in partnership with employers on labour market issues. That could start on two key issues: improving apprenticeship provision for young people and sensible change on the proposed reforms to zero-hours contracts so they don’t further restrict job opportunities for all workers who need flexibility. The current proposals for guaranteed hours will damage workers and employers alike.”