Is it time to tackle rising employment costs?

Rising unemployment costs are undoubtedly contributing to increased unemployment as the reforms to National Insurance Contributions (NICs) and higher wages bite businesses.

The result is that an estimated 1,012,000 young people aged 16 to 24 years in the UK are Not in Education, Employment or Training (NEET).

The Government wants to address this problem, but will that involve tackling rising employment costs?

What is being done to deal with youth unemployment?

For the moment, the Government is focused on increasing the mobility of young people so that they can get into the job market.

300,000 new work experience and training placements have been announced across the construction, health and social care and hospitality sectors.

The aim is to revitalise key areas that are typically responsible for making effective use of young workers.

The 300,000 placements are set to be made up of work experience and Sector-based Work Academy Programmes (SWAPs), so might be palatable for a range of businesses.

What is being done about rising employment costs?

While the attention is being focused on the young people who are struggling to find work, there does not seem to be an acknowledgement of the businesses that are finding it difficult to afford employees.

Even the analysis conducted by the Government notes that only four in ten SWAP participants move into sustained work within six months.

It may be that once employment costs bite, these schemes may not be valuable in all circumstances.

Additionally, the measures are quite limited as they do overlook the majority of the 1 million young people who are out of work and all of those outside of the target age range in the same position.

It is clear that businesses must make their own plans to tackle employment costs if they are going to continue bringing in new talent and growing.

Rather than relying on the new measures, a business can use apprenticeships, training schemes or other work experience programmes to leverage young talent.

This could be a way of training up a new worker and determining their suitability before offering them a full employment contract – something that may be more important once the Employment Rights Act limits unfair dismissal protection to six months from January 2027.

If employment costs are getting high, businesses can outsource core functions to ensure that they can focus on keeping staff who are vital for growth.

Our expert team can support your accounting needs so that you can spend less time worrying about numbers and more time making your business a success.

Financial forecasting can be used to shape your budgets in a way that lets you robustly adapt to the changing economic circumstances that may shape your business prospects.

Understanding how employment expenses set alongside your other costs can help you to manage the team that is vital for keeping your business running.

Where you may benefit from the Government’s push for tackling youth unemployment, we can help you see this reflected in your finances.

If employment costs are causing you concern, speak to our team for expert support.