The Labour Government’s 2024 Autumn Budget announcement revealed significant changes to various policies, including some that would include increases to taxation and costs.

Whilst such increases are being implemented with raising funds to reduce the UK’s fiscal deficit in mind, the potential impact of them on industries, organisations and their employees are expected to be considerable, with  impacts on recruitment, growth potential and talent retention expected.

Understanding the challenges of the employer National Insurance contributions and their implications are vital to understanding how a company can react to them with the growth of their business and their workforce in mind.

How can employers react to impact of the National Insurance change?

Planning and implementing effective strategies for talent recruitment and retention can help to minimise the potential impact of the NI increase and enable an organisation to continue the growth and development of their workforce and business, with a focus on the objective of finding, hiring and keeping the right people, with the right skills required.

This is where Carbon60’s recruitment expertise and experience of connecting engineering and technical organisations with the best talent available can pay dividends.

By investing in our talent solutions, from specialist search to temporary and permanent workforce services, a company benefits from our ability to create strategies and plans suited to their specific goals, and find, attract, hire and retain people – from a diverse, multi-skilled pool of talent – who’ll help their business grow too. 

Potential Impact on Recruitment and Talent Retention

The National Insurance increase has the potential to influence an organisation and the way it operates way beyond its expenditure, profits and overheads.

Whilst a hike in company spend and taxation will always make headlines, implications often unseen from the ‘outside world’ may have the biggest impact. It is rather what the increased spend and cost will influence that’ll potentially matter most, leading to changes in the way that an organisation, its working environment and its people operate.

Talent recruitment and retention, for example, is always affected by economic changes, and it is safe to expect the employer National Insurance rise to alter the way businesses approach the hiring of new talent, as well as keeping hold of existing workforces.

As a result of the higher employment costs, companies could face various challenges including, but not limited to, the following:

  • Changing recruitment plans - with higher costs there may be less budget available to make new hires, particularly for higher-salaried, full-time roles. This could significantly alter recruitment and growth plans and objectives.
  • Pay structure and promotion reviews - any planned pay reviews and increases could be considered unmanageable when factoring in the new additional costs involved with employer contributions and tax. Additionally, staff promotions – to higher responsibility, and therefore higher-paid roles – could become less likely.
  • Limited training and development budgets - growing employer costs can impact employees beyond their pay packets. In addition to the potential for pay and promotion reviews, training and development opportunities could decrease as part of cost cutting measures.
  • Potential layoffs - some businesses, in particular SMEs, may not only have less scope to hire for growth, but in extreme cases may in fact struggle to afford to retain their existing workforce, who could look elsewhere to find the growth opportunities and wage increases they were hoping for.
  • Financial Strategy reviews - growing employment costs will naturally impact the overall costs for a company, leading to a need to reassess overall budgets across an organisation and review how overall operations may be impacted.
  • Higher costs for consumers/clients - profits are power. Always. In the fact of higher costs, companies may be forces to raise the prices for the products and/or services they provide – knocking on the effect of employment costs on to consumers/clients who may find themselves forced to look elsewhere to save money themselves.

How We Can Support You

Carbon60 and our experts are here to help you navigate the changes to the employer National Insurance contributions, and ensure that you remain agile and competitive as you strive to find, hire and retain the very best talent for your requirements. 

This is not just a compliance challenge; it is also an opportunity to reimagine how your business engages with its workforce. We’re here to work in partnership with you and help you do just that.

If you’d like further insights or need support in preparing for these changes, feel free to get in touch with Andy Morris, Client Solutions Director, via email: andrew.morris@carbon60global.com