Autumn Statement measures likely to increase labour supply and employment


Last weeks Autumn Statement recognises the job creation potential of the UK economy but also makes it clear we need to raise our game on productivity, reports the CIPD, the professional body for HR and people development. The Institute has also responded positively to efforts to encourage more employers to recruit and train younger workers, and highlighted the related opportunities and challenges for employers of increased retirement ages.

Commenting on the Chancellor’s Autumn Statement today, Mark Beatson, Chief Economist at the CIPD,said:

“According to the Office for Budget Responsibility, 2014 will be the first year since 2007 when economic growth will be over 2% and current levels of business confidence suggest growth could be even higher than the OBR forecast if investment picks up. The OBR have also recognised the strength of the UK labour market and now expect another 400,000 jobs growth in 2014.  But as the Chancellor acknowledged, the UK’s productivity performance remains poor. This is why 2014 looks set to be the sixth year in a row when average earnings will struggle to keep up with prices. Business and government need to invest in infrastructure, tangible and intangible assets, including our people. The impact of growth on reducing the fiscal deficit is welcome, but we need to do more as a nation to address our management deficit. The increases in productivity needed to fuel sustainable prosperity can only be delivered if we get better at managing and developing the people employed in our businesses”.

Youth employment and Apprenticeship funding:

Commenting on announcements designed to support youth employment, including waiving National Insurance Contributions for under 21 year olds and action on employer ownership of Apprenticeship training, Katerina Rüdiger, Head of Skills and Policy Campaigns at the CIPD, said:

“Waiving employers’ National Insurance Contributions for job seekers under the age of 21 needs to be done carefully – to avoid putting other age groups at a disadvantage in the labour market. However, if handled in the right way it could help some organisations, particularly SMEs, overcome the negative perceptions they may have held about hiring young people. We’ve found that when young people are employed, nine out of ten employers are satisfied with the results. This tax break should encourage more employers to hire young people, so they can see firsthand the value they bring to their organisations.

“Government action to hardwire employers into the Apprenticeship funding system, so they have greater ownership of training and can hold providers to account, is also a welcome move. Going forward, it is important that businesses take full advantage of these changes. Many employers are already strong supporters of Apprenticeships, and see them as an important long term investment, helping build the future capability of their workforce. Putting employers more clearly in the driving seat when it comes to the skills agenda should help to encourage more to make this leap.

“We also welcome the announcement that Job Centre Plus will be given resources to help 16 and 17 year olds.  This was a gap in the support available for young people.  Together with support for 18 to 21 year old job seekers needing help with Maths and English, these all make a contribution to the broader need to ease the transition from education to work, something the CIPD is working actively with employers and policymakers on through the Learning to Work programme.”

Implications for employers of increased retirement ages:

Highlighting the implications for employers needing to manage an ageing workforce, in the wake of the latest increases in the state pension age announced today, Charles Cotton, Reward and Pensions Adviser at the CIPD, said:

“While increasing the state pension age makes demographic and economic sense there are a number of people management and social policy issues which flow from this. As the workforce becomes more age diverse, employers will need to consider how they adapt workplace practices to effectively manage, develop and reward people over a working life that could last over 50 years. People will have different skills, contributions, requirements and motivations at different stages of these extended working lives. Reflecting this in a way that builds effective age diverse teams can make organisations more agile, innovative and competitive.

“Equally, while average life expectancy is rising, there are occupational and regional differences, so governments and employers will need to work together to reduce these so that all workers can look forward to a decent retirement.”

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