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NICs rise 'is unlikely to impact on jobs'
HR News |
29/04/2010
Jobs in the UK are unlikely to be affected by Labour's plan to hike National Insurance Contributions (NICs), it has been claimed.
However, according to the Institute of Employment Studies, the extra cost to businesses may lead to more pay freezes being implemented.
The body's director Nigel Meagers said: "While businesses inevitably dislike increases in payroll taxes, most economists agree that the immediate direct impact on jobs of the NI increase is likely to be small.
"The effects of any increase are more likely to be felt by employees, as employers keep wage increases down to try and recoup some of the extra cost."
He added that the ultimate effect of an NI increase will depend on how the extra revenue it raises is spent. For example, if the cash finds its way to people on lower incomes then it could even lead to more jobs through the effect on consumption and demand.
The Labour party plans to raise NICs by one per cent from April 2011.
Posted by John Lynes
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