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'Don't take risks with jobs recovery', CIPD and British Chambers of Commerce tell Mandelson

The Chartered Institute of Personnel & Development (CIPD) and the British Chambers of Commerce (BCC) has called on the government to avoid any further statutory increases in the cost of employing staff during what looks like being a 'jobs-light' economic recovery.

In a joint letter to Peter Mandelson, the Secretary of State for Business, the CIPD and BCC warned of the consequences of the 1% increase in employers' National Insurance Contributions scheduled for April 2011, and recommended a freeze in the youth and development rates of the National Minimum Wage to avoid counteracting the impact of the government's own welcome measures to combat rising youth unemployment.

The letter was written in the context of recent research from the CIPD which shows that more than one in 10 employers (12%) intend to recruit fewer staff as a result of the planned hike in employers' NICs, while 8% would make job cuts.

Dr John Philpott, CIPD chief economic adviser, said:

"The combined efforts of the government, the Bank of England, employers and workers has helped limit the impact of the recession on jobs and prevented unemployment from rising as much as feared. But it's just as important that nothing is done to put jobs at risk during the recovery.

"With many employers struggling to contain labour costs this year and next against a likely backdrop of still subdued demand, the planned hike in NICs will inevitably cost jobs. And while the government is rightly devoting taxpayers' money to helping Britain's 1 million jobless young people, it would be absurd at the same time to raise the youth minimum wage."

Adam Marshall, BCC director of policy said:

"The cost of employing people must be reduced if future governments are serious about giving businesses the freedom to create jobs and drive economic recovery. Employers will create jobs and wealth, but the rise in National Insurance in 2011 will mean £14bn in extra costs over the next four years. That is little more than a tax on jobs and it must be scrapped."

www.britishchambers.org.uk / www.cipd.co.uk

12th February 2010

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