National Insurance increases will damage job prospects for young people, says BBPA

Changes to employer National Insurance Contributions (NICs) announced in last month’s budget will damage job prospects for young people, new research suggests.

 

Pubs currently provide jobs for more under 25-year-olds than ever, with 350,000 people in employment in the sector, up 24% on 2019, according to data commissioned by the British Beer & Pub Association (BBPA).

 

It said that the changes to NICs, with the rate of employer Class 1 NICs going from 13.8% to 15% and the threshold at which employers become liable to dropping from £9,100 to £5,000 a year, will halt recruitment and push up prices.

 

The BBPA added that this would hit young people most hard, since a career in hospitality is the first step on the career ladder for millions entering the job market.

 

Currently NICs for 350,000 under 25-year-olds are approximately £82m. When the NIC changes come into force, the BBPA estimated it would cost £153m to keep on the same amount of under 25-year-old workers.

 

Research has suggested that those working short shifts will be the most expensive to employ, with UKHospitality estimating it will be £2,100 more costly to employ a single parent working 9am to 3pm, five days a week, and £1,140 more expensive to employ a student working 14 hours at the weekend.

 

BPPA chief executive Emma McClarkin said: “We know government acknowledged our industry, but they must be clear-eyed about the shattering effect new regulations will have on us.

 

“Many will have worked behind a bar and know that it’s more than just a job. Our industry provides rewarding careers, helps younger people build skills, grow in confidence, and fund university education or driving lessons. Without this vital work many would struggle with rents, bills and basic living.

 

“If we’re to keep people in work and put money in their pockets, business needs to be viable. We urge the government to reconsider the timings of the new employment costs and swiftly deliver meaningful business rate reforms. Only then can we continue to be the backbone of the UK job market and a cornerstone of the community.”

 

After lower than expected growth figures were revealed last week, UKHospitality repeated calls to reconsider employer NICs to boost the economy.

 

Chief executive Kate Nicholls said: “Hospitality has proven time and again that it can be an engine for growth, and was forecast to grow 6% year-on-year. That potential is still there, if the government rethinks its changes to employer NICs and takes a high street-first approach to growth.

 

“Hospitality is disproportionately hit by these changes, as a significant employer of part-time staff, and we’d urge the government to either create a new employer NICs band for lower earners or implement an exemption for lower band taxpayers working fewer than 20 hours per week.”

 

Photo: Slava Stock/Shutterstock