Workers are fearing they will be made redundant under Labour’s plan to raise employer’s National Insurance.
Chancellor Rachel Reeves announced in today’s budget employers will now start paying National Insurance at £5,000, rather than the previous £9,100 threshold.
Experts are now warning many businesses will not be able to afford to keep as many staff, with Martin Lewis warning it’ll cost employers an extra £615 to keep each worker.
And it is expected business owners will have to dip in to profits to afford the new costs.
One small business owner Gareth Morgan, who runs marketing agency Balance, said: ‘Businesses are less likely to make a profit, the lucky ones that make a profit now get to keep less of it and the very, very lucky ones who get to sell their business, take home less.
‘It makes small business owners question their sanity.
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‘I know people who’ll be less likely to employ based on this and this will certainly be factored into our growth plans based on head count.
‘The government should be doing something to encourage small businesses rather than push them away as small businesses are what helps the overall economy grow.’
Minimum wage has also been raised to £12.21 per hour, which is up 6.7% to be £1,400 a year for each full time worker.
The health of workers is also more at risk under the looming threat of redundancy, as well as many losing out on medical benefits.
Julia Turney, Partner and Head of Platform and Benefits, Barnett Waddingham: ‘This might turn out to be a short-sighted move which could have serious implications for employee benefits and public health.
‘Many employers currently use the savings they receive from National Insurance relief to boost pension contributions or fund additional benefits like healthcare and life assurance.
‘If these savings disappear, many employers could make the difficult decision to reduce or cut these benefits altogether.’
People have taken to social media to say they know redundancies are on the way.
One X user wrote: ‘Rachel Reeves has just lost millions of people their jobs. No small or medium sized business can afford this. Redundancies are going to sky rocket.’
Another added: ‘It means that I will have to lose a third of my small team, redundancies are now inevitable for my small business.’
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