Neil Carberry, the chief executive of the Recruitment and Employment Confederation, warns that reducing the NICs threshold will make solving Britain’s worklessness crisis harder.
“The threshold change is especially challenging as it raises NI on the wages of lower salaried workers much more – not just lower paid workers but also many part-time workers who will become far more expensive to engage,” he says.
Carberry adds that one of his members who employs hospitality workers has 31 of their own staff but also payrolls all their temps. “Their NI bill goes from £375k per annum to £657k, wiping out their profit. These kinds of rises make creating entry-level roles less attractive and that will damage the fight against economic inactivity.”
On a hostile call last week with retail chiefs and hospitality leaders, Jonathan Reynolds, the Business Secretary, and James Murray, the Exchequer secretary to the Treasury, were quick to point out that employer NICs are not payable on the earnings of employees aged under 21.
But Burns says it will still leave his company facing tough choices.
“Whenever you get a significant cost increase, you’ve got three options. You cut costs, you put prices up or you stall investment. I don’t think it’s right that we’ll be stalling investment. So our biggest cost savings come under property or people.
“Property savings you can’t make very quickly, but you can with people. So clearly, we’ll be looking very hard on our payroll lines. Every new team member we recruit now will involve significant incremental cost.”
Working in places like Hollywood Bowl is often a first job for many, one that gives them valuable experience in how to behave in an organisation that they can then use as a launching pad for other things.
But Burns warns that increasing employment costs will make getting that first job harder.
“For a lot of people, we’re a gateway employer. Many people’s first job was in hospitality. We teach people how to work and how to behave and how to act in the workplace before they know better. And, yes, we get disproportionately impacted by sickness and people not turning up, and people who don’t know what to do – but when employment costs are lower we can afford to double up on shifts and train them up.”
Greatorex, at the Hand At Llanarmon in Llangollen, agrees: “The reality is, we will be going from the stage where we were always keen to look out for young people who want to come work for us to saying, ‘Actually, at the moment we’re not recruiting, we’re cutting back.’”