Retail and hospitality leaders have today warned of large scale job losses and cuts to investment following the national insurance hike.
The increase in employer NICs from 13.8 per cent to 15 per cent, coupled with the government’s lowering of the salary threshold at which companies begin paying NICs, has sparked concern.
Retailers are particularly worried about the impact on part-time hiring plans once the changes come into force today.
The increased cost of employing staff could lead to a reduction in available positions, potentially impacting employment opportunities within the sector.
The hospitality industry is also feeling the pressure. The head of a major pub group revealed that investment plans are being scaled back to absorb the rising costs.
This suggests that planned expansions, renovations, or other improvements may be delayed or cancelled due to the NICs hike. The combined impact of these changes could have significant repercussions for both the retail and hospitality sectors, potentially affecting employment levels and future growth.
The fresh tax increase comes days after businesses were hit by a 6.7 per cent increase in the national minimum wage.
Many high street firms have also faced higher costs from an increase in business rates due to a reduction in current discounts for more than 250,000 retail, hospitality and leisure firms.
The British Retail Consortium (BRC) said changes to NICs and wages will cost retailers another £5 billion over the next year.
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It said it will cost shops 10 per cent more to employ workers due to the changes, and 13 per cent higher for part-time staff.
Helen Dickinson, chief executive of the BRC, said: “A recent survey of retail finance directors showed that half were planning to reduce hours and workers as a direct result of the employer NIC hike.
“It will be part-time jobs which take the biggest hit.
“Part-time retail jobs hit their lowest level since records began in 1996, and have fallen by 200,000 in the last seven years.
“While the Government’s welfare reforms aim to increase the numbers in work, this week’s cost increases will kick away the ladder for many who are just getting their first foothold.”
Meanwhile, the chief executive of pub giant Greene King said its investment plans would be impacted as a result of swallowing larger-than-expected costs following the October budget.
Nick Mackenzie told the PA news agency: “Everyone in the industry is facing a barrage of costs that are hitting them at the same time, with the minimum wage rise, NICs, business rates.
“We are still investing heavily but there are areas where we have trimmed our investment plans because we have to be sensible about managing these costs.”
