National Insurance increase will lead to job cuts

More
than half the UK’s manufacturers will cut employment levels when national
insurance rises are imposed next April, according to the latest research.

The
survey carried out by the Engineering Employers’ Federation (EEF) also found
that as many as a third of UK manufacturing firms intend to move costs abroad
when national insurance increases.

EEF
director general Martin Temple warned that imposing further taxes could damage
competitiveness and said it could threaten jobs and profits.

"The
survey confirms our worst fears about the effect of yet another cost, on top of
rising insurance premiums, increased pensions and the climate change levy. The
Government is playing a very dangerous game with manufacturing jobs," he
said.

The
survey of more than 1,000 companies was part of the EEF’s third-quarter
business trends survey investigating companies’ responses to the 1 per cent
national insurance hike announced in the last budget.

Around
30 per cent of those questioned had not yet decided on a response, but Temple
said the combined effect of the increase and current conditions could damage
competitiveness.

"They
may not have a huge impact on their own, but the cumulative effect of these
increases is leading to a substantially less welcome environment for
manufacturing and preventing the vital investment necessary to improve
productivity."

Findings
in full:


68 per cent will absorb costs in lower margins


53 per cent will reduce employment levels


32 per cent will move costs abroad


54 per cent forecast lower wage increases


24 per cent will cut pension contributions


48 will pass on cost to customers

By Ross Wigham

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