Nearly half of all companies across the UK are scaling back hiring plans due to higher wage taxes, according to new research.
The pool found that 46 per cent of firms thought recruitment decisions would be impacted, with many reporting that they were already not hiring or postponing recruitment, according to Reed.
“Everyone understands that there are difficult decisions to be made given the state of the public finances, but we warned when the increase in employers’ NI was announced that it was a tax on jobs and so it has proved,” Reed CEO James Reed said.
“The hole this tax increase has made in a million company balance sheets is regrettable. These are tough times for companies that want to hire and expand and this will feed through into weaker economic growth,” Reed added.
Respondents to Reed’s poll – of 254 companies representing over 260,000 employees – estimated that their annual profits would decrease by 29 per cent on April 6, when the change to employers’ contributions (NICs) was implemented.
National insurance contributions (NICs) are set to rise 1.2 per cent, while the threshold employers must start paying the tax will fall to £5,000.
“As responsible employers we want to ensure we are paying a fair wage to our staff,” president of the Federation of Independent Retailers (Fed), Mo Razzaq, said.
“But a bigger than expected rise to the national living wage… is a step too far for hard-pressed small businesses.”
The increase to NI contributions is causing 27 per cent of businesses to postpone or cancel hiring new employees, with 16 per cent saying they were making redundancies and 19 per cent reporting that they were postponing or cancelling salary reviews, according to Reed.
