Businesses cannot continue to absorb higher employment costs while delivering growth, a major new industry report, published today, has concluded.
“At what cost? Jobs and growth in a stalling labour market”, from the CBI and Pertemps Network Group, points to the fact that firms are running out of options to fund pay rises without productivity growth – and currently climate of rising costs is making that difficult.
It follows extensive consultation with businesses across the UK about their plans for the coming year and the obstacles to growth that they seem as hampering them the most.
Findings include:
50% say the cumulative cost of doing business is the top threat to their competitiveness
Seven in 10 said the recent National Insurance Contributions (NICs) rise was the biggest factor in rising costs
The balance of businesses planning to invest in training the coming 12 months is negative
50% believe continued rigidity in the Growth and Skills Levy will stop their organisation from being able to plug skills gaps.
Carmen Watson, Chair of West Midlands-based recruitment specialist Pertemps Network Group, said: “Falling confidence to hire, rising employment costs and persistent productivity challenges continue to hold the market back.
“Pay pressures are harder to meet, high costs are widening skills gaps and recruitment decisions have become more complex for everyone involved.
“Yet there are genuine reasons to be optimistic. Confidence in developing skills beyond formal qualifications has risen slightly over the past year.
“More organisations recognise that supporting candidates to build essential workplace capabilities, whether new hires or existing staff, is central to long-term success.
“Above all, this report reinforces a simple truth: collaboration matters. Businesses, government, trade associations, education providers, and candidates themselves, all have a part to play in addressing the challenges ahead.
“Through working together, we can close skills gaps, strengthen productivity and build a labour market that delivers opportunity and sustainable growth for everyone.”
Matthew Percival, CBI Future of Work and Skills Director, said: “This survey is published ahead of a crucial period in which the Budget and the Government’s approach to implementing the Employment Rights Bill will set the tone for the rest of the Parliament.
“The businesses that I speak to each day are optimistic about their potential to grow and improve people’s lives through good jobs.
“To unlock this opportunity, the Government needs to change its approach, avoid adding to employment costs and forge a new partnership with business to co-create policies that will drive growth through investment, funding public services and welfare, and improving living standards for all.”
You can read the full report here.
