 has said.){kind=link}
A decrease in payrolled employees and an increase in the unemployment rate means the government should review its policy on employment, the Institute of Directors (IoD) has said.
Job vacancies fell by 9,000, or 1.3%, in the three months to September, and the national unemployment rate increased from 4.7% to 4.8%, the Office of National Statistics (ONS) revealed on Tuesday.
Commenting on the figures, Alex Hall-Chen, IoD principal policy advisor for employment, said:
“Taken together, the Employment Rights Bill, the increase in employer National Insurance Contributions, and above-inflation increases to the National Living Wage are having the very impact businesses have been warning about for a long time: directly increasing the cost and risk of employing staff and undermining job creation.
“An IoD survey of 588 business leaders in September found that half of businesses which saw an increased National Insurance bill from April have responded by reducing employment. At the same time, the government’s refusal to engage with sensible amendments made to the Employment Rights Bill has sent a clear signal to businesses that their concerns are being ignored.
“A change of policy direction is needed if the government is to meet its target of stimulating growth and supporting businesses to create jobs. The Chancellor should avoid levying additional taxes on business in the forthcoming Budget, and the government should begin to engage meaningfully with employers to minimise the damage that the Employment Rights Bill will do to job creation and economic growth.”
Other reaction to the ONS figures:
Julia Turney, partner and head of platform and benefits at BW, said:
“Unemployment remains stubbornly high this quarter just as employers brace themselves to implement the government’s new Employment Rights Bill set to receive Royal assent this month.
“Still reeling from recent National Insurance rises and facing a highly volatile economic environment, businesses are increasingly looking to trim the fat in order to remain profitable in a highly volatile business environment. In real terms this means cutting back on wages settlements and even implementing a recruitment freeze as they wait for a return to more stable conditions.
“During this period of uncertainty, business leaders need to plan carefully to ensure they have the resources in place to absorb pressure points on the road ahead and stay on track. Successful businesses will be those that can utilise their existing talent and resources to stay grounded when the ground shifts.”
James Cockett, senior labour market economist for the CIPD, said:
“Vacancies are continuing to fall as the labour market cools. It appears that the full impact of National Insurance changes has now been reached, with the number payrolled employees numbers remaining stable. However, employers are likely to be cautious about November’s Budget and upcoming changes to employment legislation, which combined, may deter hiring further over the coming months.
“As employment costs remain high, it’s critical that employers aren’t discouraged from hiring young people, especially in key sectors like retail and hospitality which provide many young people with their first step into working life.
“Unemployment for young people aged 18-24 has fallen slightly but remains high at 12%, highlighting the need for action by policy makers and employers to create employment opportunities for this group.
“A key priority for the government should be to consult meaningfully on key measures in the Employment Rights Bill still to be decided in secondary legislation. It’s vital these measures don’t act as a headwind on employment growth and add cost and complexity to the process of recruiting and managing new staff, and younger people in particular.
“Equally, there’s a need to strengthen steps to support young people in securing training and employment. The government needs to go further than its planned youth guarantee and introduce an apprenticeship guarantee for all 16 to 24-year-olds, to provide valuable opportunities for young people to both learn and earn. Better training and employment opportunities will ensure they start their working lives on the right foot while helping employers build future talent pipelines.”