New Employment Legislations May Prevent Job Growth

1STOctober 2013 will see the increase in minimum wage for all hourly workers in the UK. As a result of the devastating impact of the recession, unemployment hit an all time high in 2011 andcontinues to maintain those figures to this day.  A glimmer of hope to many is seen through the government’s decision to increase the hourly rate, yet with SME’s still recovering from the blow of the current financial climate, businesses are worried as to how this decision will affect their companies on a daily basis.

 An increase in employer’s wages ultimately means a sacrifice elsewhere. SME’s can only sit and wait to see how this new regime will affect the stability of their companies. Adjustments will have to be implemented which could result in a cut-back in employee work hours. The irony is evident; as an employee, how do you reap the benefits in an increase in wages, when there are no hours to work? Not only could there be a huge reduction in hours, but some businesses could retract new staffing altogether, adding to the unemployment figures further.

Additional adjustments would have to be applied to avoid financial insecurity within companies. In order to balance the financial output, they would have to gain more through their income; therefore businesses would have no other choice but to reduce employee benefits and charge higher prices to restore the equilibrium.

 Jason Connon, Managing Director form Cushillo Personnel commented “ Our own industry has seen a raft of new legislations introduced over recent months, from the introduction of AWR regulations, RTI payroll, pension reforms and now the pending increase in the cost of employing staff.

All these add additional costs to business and could have a potential impact on our UK flexible temporary labour market. The recruitment industry currently generates a turnover in excess of £19.7 billion and places 1 million people into temporary jobs each week in every sector of the labour market, as well as a significant number of permanent placements.

In my opinion, it is critical The UK must maintain a flexible workforce and the advantages it creates for businesses, individuals and the wider economy.  Imposing overly burdensome regulations on businesses remains a real concern for our clients and how they will cope with the new responsibilities in the current climate of fragile economic recovery.

Whilst all good recruiters want to see workers paid fairly for the importantcontribution they make. The increased administration and tracking required by the recent AWR and Pension regulations presentsthe most significant challenge our industry has ever faced.

This is another challenging area of regulations which will create new costs for recruiters and employers, especially since for the purposes of these reforms; recruiters are considered ‘employers’.

This swathe of regulation and the complexities it creates with regards to workers who change roles frequently must not be underestimated. The pressure on margins and the administration of enrolling and then un-enrolling workers, will be another significant cost to employing temporary staff.

It is important we foster modern work place practices and offer valuable flexibility to workers, ultimately, the UK workforce can only develop if businesses have the freedom to grow and create jobs, and so the impact of any new regulations must be carefully weighed up.

While the pressures of inflation are affecting many people, including the lowest-paid, the scale of recent legislation and pay rises, adds significantly to business costs, most of all by contributing to overall employment costs for employers.

The fear is, it will make some employers less inclined to hire additional members of staff. Put simply, it could lead to more people out of work, as employers will have no choice but to take on fewer staff to do the same work.

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