The chancellor’s spring statement failed to address key workplace challenges that employers are facing, according to the CIPD and the boss of the ManpowerGroup UK.
The CIPD said that while Rachel Reeves had been “quick to add costs and taxes” now the government needs to invest in skills and support or it risks undermining economic progress.
Ben Willmott, CIPD head of public policy, said: “While the chancellor highlighted welcome support for key sectors such as defence and plans to boost investment in infrastructure and housing, there was no recognition of the need to provide more support for employers.”
He highlighted the business impacts of employer national insurance rises and the planned increase in regulation that will come when the Employment Rights Bill is passed, saying these major policy shifts “have created clear headwinds for employers”.
“We now need to see the government back businesses by setting out how it will work with employers to address these challenges and boost productivity, as together these measures stand to undermine business investment in workforce training and employment, as CIPD data has shown.”
Last month, CIPD research confirmed that NI hikes had prompted widespread business plans to cut hiring and increase redundancies.
Willmott said it was crucial that the government continues to consult with employers on key measures in the Employment Rights Bill. Consultations would help to ensure employers don’t face increasing costs and risk of employing staff as this would undermine efforts to Get Britain Working.
“If the government wants to see more people in work, then there must be jobs for them to go to. It’s important that new regulations don’t deter employers from hiring staff, especially younger people and those that might need more support.
“We also need a clear implementation plan for the Employment Rights Bill to ensure that employers are able to comply with the raft of new regulations, and this must include additional funding for ACAS and for the employment tribunal system to manage the likely increase in claims.”
He called for the consultation on the new Growth and Skills Levy to be “fast-tracked” to help employers invest in training to tackle skills shortages and support technology adoption.
“We also need the government to back recommendations that come from the Keep Britain Working review and work with employers to keep people healthy and in work, for example by improving access to occupational health support for SMEs.”
Signs of stability?
Michael Stull, managing director at ManpowerGroup UK, said that business leaders had been looking for signs of stability from the chancellor’s spring statement and while there were no major surprises, the broader uncertainty was a concern.
He said this uncertainty was “exemplified in the cutting of this year’s growth forecast to 1 percent which means that realistically we aren’t expecting any significant uplift for the UK labour market until at least the second half of 2025”.
Stull said: “From a business perspective there’s no doubt that UK organisations have the hunger to grow and to innovate. For some organisations, such as those working in the defence and security industries, there is potential and the opportunity following confirmation of additional investment into the sector. This is good news for highly-skilled engineers and scientists but less so for members of the civil service where headline job cuts have been announced.”
The headline figure is that 10,000 civil service jobs will be cut, which will include HR roles.
Stull said that at a broader level the attention of many businesses is likely to focus on ensuring compliance with welfare reforms and the Employment Rights Bill.
“The reality is that some of these well-intended measures to encourage more people back into the workforce, will initially have the opposite effect because of employer concerns around associated costs. As the chancellor said herself, it will take time for many of these reforms to have an impact.”
He said: “It’s in this context of major reform and ongoing uncertainty that the broader labour market is holding tight. The latest UK employment data shows little sign of movement and with major government spending and major policy restructures underway, we expect there will be further signs of slowdown before seeing any return to growth and hiring confidence.”
