Following the national insurance contribution (NIC) increase to 15% and lowering of the earnings threshold at which employer NICs are payable from £9,100 to £5,000 these costs are going to hit employers hard. These changes will disproportionately affect employers with large workforces on lower hourly rates, and with narrow profit margins: hospitality and retail.  

The Chancellor has said that businesses should be able to absorb the additional cost by finding efficiencies and accepting lower profit margins. Hospitality and retail have some of the narrowest profit margins already and in the middle of an on-going cost of living crisis, only so much of the additional costs can be passed on to consumers. Where the additional costs are based solely on staffing, the most straight forward ‘efficiencies’ can be found by reducing the workforce. 

We’ve already seen Asda make almost 500 redundancies since the Budget and with 200 hospitality sector leaders writing to the Chancellor with their concerns about the increased cost, it is likely that further large-scale redundancies are on the horizon…