IoD: Welcome signs of improved labour supply but businesses worried about cost of employment

Commenting on this morning’s release of labour market data, Alexandra Hall-Chen, Principal Policy Advisor for Employment at the Institute of Directors, said:

“The decrease in economic inactivity and increase in the UK’s employment rate shown in today’s statistics are welcome signs of improved labour supply.

“However, our own data shows that business leaders are concerned about the impact of the Employment Rights Bill on the cost of employment. In order to meet the government’s target of an 80% employment rate, it will need to work closely with the business community to avoid its reforms deterring employers from hiring in the UK.

“Businesses will welcome the decrease in average earnings by 0.2 percentage points but, at 4.9%, it remains a significant inflationary pressure for employers. In light of this pressure and the increased costs which will result from the Employment Rights Bill, government should avoid measures in the forthcoming Budget which further increase the cost of employment. At the same time, we encourage them to reintroduce a rebate scheme to help SMEs with higher costs resulting from changes to the Statutory Sick Pay entitlement.”