Labour’s proposed increase in national insurance (NI) contributions for employers is unlikely to affect job numbers, according to an employment expert.
However, the director of the Institute of Employment Studies Nigel Meager warned that pay increases may be prevented, although he commented that the NI debate and its key implications is a "red herring".
Mr Meager stressed that while companies may dislike a tax rise on payrolls, most economists believe the direct impact in terms of job levels would be small.
"The effects of any increase are more likely to be felt by employees, as employers keep wage increases down to try and recoup some of the extra cost," he added.
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But Mr Meager hinted that the true impact of NI increases will be in how government spends the revenue and said that, if distributed to lower income households, it could lead to more jobs in the long term.
A report released this week by the Chartered Management Institute revealed that 52 per cent of private sector organisations are cutting back on recruitment.
By Colette Paxton
