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- Are escalating National Insurance contributions eroding your profitability and impeding your growth trajectory? This situation is not inevitable…
- Economic uncertainty and escalating employment costs have curtailed recruitment activities across the UK economy, with an unprecedentedly low proportion of businesses intending to recruit new staff, according to several surveys published over recent months.
- The Chartered Institute of Personnel and Development (CIPD) has reported that only 57% of firms plan to recruit staff in the next quarter – a 10% decrease from the previous Autumn – whilst KPMG/Recruitment and Employment Confederation (REC) identified a scarcity of advertised vacancies for both permanent and temporary roles in July.
- Businesses contend that since the Government's decision to impose a £25bn increase in Employers’ National Insurance contributions (ERNIC), business investment has been curtailed – particularly concerning human capital, where costs have increased markedly.
- With Employer’s National Insurance escalating to 15% and the small business NI allowance reduced from £9,000 to £5,000, the cost of employing staff is experiencing a significant uplift. The annual cost of employing an individual on a £25,000 annual salary now exceeds £1,000 per annum more due to the ERNIC increases, prior to factoring in wage inflation.
- Undoubtedly, reducing staff numbers and omitting to backfill vacant positions presents a significant impediment to business progression, and it is highly probable that any immediate “gains” will be realised at the expense of sustained long-term growth.
- However, alternative options exist.
- At ERA Group, both directly and in conjunction with trusted partners, we provide our clients with multiple strategies to at least offset 100% of the increase in ERNIC costs – and in many cases can facilitate client’s saving up to 50% of their total ERNIC liability.
- Some of these strategies leverage Employee Benefits schemes and organisational restructuring, which offers the additional advantage of enhancing talent attraction and retention whilst streamlining payroll, human resources, and regulatory compliance processes.
- For example, a business with a modest workforce of 100 employees and a monthly payroll expenditure of £200,000 can expect to realise savings exceeding £150,000 per annum whilst providing a comprehensive suite of Employee Benefits to their personnel. Seeking to reduce expenditure and finance growth? Email Paul Gravatt (pgravatt@eragroup.com) or speak to your ERA contact to arrange an initial, no-obligation consultation.
- Contact Paul Gravatt
Tel: +44(0) 7860 780 770E-mail: pgravatt@eragroup.com
