According to the Office for National Statistics, the hospitality sector was responsible for nearly half of the job losses.
The increase in employer’s national insurance contributions announced in last year’s budget has been blamed by trade bodies for the loss 84,000 jobs.
This sector was responsible for 45% of the total job losses. That’s about 13,000 jobs per month. Between April and June of this year, there were 79,000 estimated vacancies.
Kate Nicholls is the chair of UKHospitality. She said that “the change to employer NICs was socially regressive, and had a disproportionate effect on entry-level positions.”
Without a change in government policy, we may be facing even more job losses, especially in the hospitality industry, when the goal should be to bring people back into the workforce.
The trade association wants the government extend current exemptions for NI contributions so that they include young people as well as people who are moving from welfare into work.
Saxon Moseley is a partner at RSM UK and the head of leisure & hospitality. He said that the decline in hospitality staff had been a trend for ages, but was accelerated by the increase in employment costs.
He said: “We expected to see the number of vacancies drop from the immediate post-Covid peak, but the continued fall below 2019 levels indicates that government policy is heavily weighing on the sector.”
Some operators have reached the limit of passing costs on to their customers. They have reduced their headcount in order to reduce their expenses and maintain margins. This could negatively impact customer service. In the Autumn Budget, the government may revisit the National Insurance hike to provide some relief for the sector.
Moseley also added that uncertainty over immigration policy is a concern for the industry.
The upcoming changes to the visa system could mean that minimum salaries for skilled workers visas go from PS38.700 to PS41.700. This may impact access to chefs or similar roles.
He said: “The industry relies heavily on foreign workers. An inability to find the right staff would only exacerbate issues with workforce.”
Retail is also hard hit
The Times has found that the retail sector is also heavily impacted by rising employment costs. An analysis of HM Revenue & Customs figures shows that the number of roles in this sector has fallen by 45.600 since the last budget.
Helen Dickinson is the chief executive officer of the British Retail Consortium. She said that the changes in NI contributions combined with the increase of the national living wages had “almost over-night” pushed up the cost to hire entry-level employees by 10%.
She said: “Retail offers opportunities to meet the needs and wants of people from all over the country, whether they are young people starting their careers or parents or carers who return to work to balance other commitments.”
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