Firms to cut hiring plans over new workers’ rights – Daily Business

Companies are warning that the Employment Rights Bill will further erode their competitiveness and reduce their willingness to hire workers.

Almost nine in ten firms (86%) responding to a survey said the UK labour market is already a  less attractive place in which to invest and do business than it was  five years ago. 

Businesses are reeling from the hike in National Insurance Contributions and the past three National Living Wage increases which have added £24 billion to the annual cost of doing business.

The Treasury has been told that nearly 8 in 10 companies (78%) responding to the latest CBI/Pertemps Employment Trends Survey believe the Employment Rights Bill will hit growth, investment, jobs and bonuses. This is up from 54% last year.

A quarter of respondents (27%) believe their organisation will be smaller in twelve months’ time, against 26% intending to grow.  

The findings come after CBI chair Rupert Soames told business leaders in Glasgow that rising Labour costs were a major concern.

“At the time of the November budget, we warned the Chancellor that the changes to National Insurance she announced would have a serious impact on companies’ willingness to hire people, would harm growth, and would be in direct conflict with the government’s policy to get people off benefits and into employment,” he told the organisation’s annual Scottish dinner.

“It gives me no pleasure to say that we have been proved right. All the surveys and figures we see, all we hear from members, says that the NICs changes are having a serious impact on employment: vacancies are down, unemployment is up, and job creation has slowed.”  

Commenting on today’s survey, Matthew Percival, CBI future of work and skills director, said:  “These findings send a stark message: unless policymakers take urgent steps to ease regulatory and cost pressures, the UK risks undermining its own competitiveness.  

“Businesses want to invest, hire, and grow – but they need a stable and supportive policy environment to do so. 

“Labour costs, regulation, and skills investment are critical areas where action is needed to safeguard the UK’s labour market resilience and attractiveness over the next five years and beyond. 

“Businesses recognise that the Employment Rights Bill is happening. The key question is how to deliver it in a way that builds consensus. 

“A pro-growth landing zone is possible but it requires changes to the Bill to make probations meaningful, ensure a practical approach to managing variable hours, and a reasonable balance between the right and responsibilities of employers and trade unions.”