British companies are slow to recognise the impact of national insurance increases

A survey of over 500 SME companies undertaken by national recruitment business, Blue Arrow, shows that 30% of those businesses havenít even contemplated the impact of increased employerís and employeeís National Insurance Contributions that came into effect in April 2003. This contrasts strongly with almost 60% who felt the increases of 1%, would have an effect, ranging from marginal to significant. Only 5.7% felt the increases would have no change at all.

Under new laws, employers now pay the additional 1% on workersí salaries over 4,615 to the Inland Revenue increasing the rate from 11.8% to 12.8%. The survey took place amongst companies across a range of industrial sectors, including hospitality, commerce, transport/ logistics and manufacturing industry, at a time when concern has been voiced amongst business leaders that the new measures will increase labour costs when the employment market is already under pressure.

Mark Adams, UK Chief Executive of Blue Arrow commented, ìWe are concerned that a number of companies may not have taken the recent National Insurance increases seriously. Changes of this nature affect everyone, not just large operators. In order to deliver best performance and emerge strongly from the current slowdown, the business community must be better informed and companies need to plan ahead to ensure that they are not caught outî.

He continued, ìMany employers will respond to the increases by shifting the dynamics of their workforce to comprise a new mix of temporary and permanent staff. This will enable them to draw on labour to meet demand, yet reduce overall impact. In instances such as these, it is important that the recruitment industry takes a responsible stance, and works closely with employers to help them implement flexible resourcing models that are right for them and do not focus exclusively on cutting costs.