CIPD Budget response: economic outlook remains challenging, but measures to encourage job creation and retention are welcomed


The Chartered Institute of Personnel and Development (CIPD) has welcomed measures set out in the Chancellor’s Budget today that will help more people get a foot on the employment ladder, make it easier for those who’ve been sick to return to work when they are able, and to help those in work plan with confidence for their retirement. Commenting on today’s Budget and the accompanying forecast released by the Office for Budget Responsibility (OBR), Mark Beatson, Chief Economist at the CIPD, said: “The economic forecast released today alongside the Budget contains few surprises.  The very difficult situation in the eurozone casts a long shadow over the UK because of our close trade relationships with Europe so halving the growth forecast for 2013, to 0.6 per cent, was to be expected.  The OBR admits that it was surprised by the 600,000 increase in employment in 2012, given the lack of economic growth.  In this respect, the OBR forecast of 100,000 employment growth in 2013 and a further increase of 100,000 in 2014 may prove to be conservative. 

“The difficult fiscal situation gave the Chancellor little room for manoeuvre, in terms of measures to stimulate the economy, but the budget did contain a few measures that should encourage employment creation and retention and provide a degree of support and certainty for employers.  The proposed reduction of up to £2,000 in employer National Insurance Contributions, to be introduced in 2014 for all employers, will provide a marginal incentive for small businesses to create new jobs and the announcement of growth vouchers to enable small firms to access business advice has the potential to provide them with invaluable help in recruiting, managing and engaging employees in support of business growth.”

On plans to give tax relief to companies that look after their employees and help them return to work after periods of sickness,Ben Willmott, head of public policy at the CIPD, adds: “We look forward to hearing more about the Government’s plans to support occupational health schemes. Research shows that the longer people are off sick, the less likely they are to make a successful return to work; after six months’ absence from work, there is only a 50% chance of someone making a successful return.  Anything that encourages more employers to look after the health of their workforce can only be a good thing – for employers and employees alike.”

On news that the flat rate state pension will be brought forward from 2017 to 2016, Charles Cotton, rewards adviser at the CIPD, said: “Without the simplicity of a flat-rate pension to explain what life on the state pension alone looks like, it has been difficult for employers to convince some staff of the benefits of contribution to a workplace pension scheme.  By bringing forward the implementation of a simple, easy to understand baseline pension, government is speeding up employers’ ability to encourage more workers to invest more in their pensions savings, to boost retirement incomes closer to the levels most would aspire to.”