WorkBuzz is urging the Government to re-think the £25bn rise in employer national insurance contributions and its impact.
Steven Frost, CEO and founder of employee engagement specialist, WorkBuzz, says, “In a country where living standards are already declining, the £25bn jobs tax will have real consequences.”
He continues, “The economy grew just 1.1% in 2024, but the underlying picture is even worse once you factor in a larger population, fuelled by migration. Do this and you will see the GDP per capita is actually down 1% in the last two years. With no change, our kids will be the first generation worse off than us. Clearly, we need to do something, otherwise with an ageing population, it’s a question of when, rather than if, state pensions and the NHS become means-tested or reach breaking point. This is about more than payroll numbers.”
Frost explains that while it’s easier politically to target business for taxes, there is a knock-on effect that must be considered. The biggest impact for WorkBuzz hasn’t been the direct rise in its payroll; it’s been the shock – to the economy and its clients.
Frost says, “A 1% jobs tax rise may sound modest, but in people-intensive, low-margin businesses in sectors like hospitality or care, it’s the straw that breaks the camel’s back. We’ve seen many clients make redundancies, pause hiring, and scale back investment. That in turn affects our ability to invest and keep hiring at the same rate as before.”
WorkBuzz highlights that it’s not just a domestic issue. With a fifth of the WorkBuzz team distributed throughout Europe, including a cluster in Poland, when the company is thinking about hiring its next software engineer, it’s not necessary to hire that person in the UK – they can largely hire them anywhere in the world. What the increase in tax does do is make it slightly less attractive to hire in the UK. And WorkBuzz isn’t alone here.
Frost says, “1% isn’t enough to sway our decisions, but it does follow auto-enrolment, which placed a further 3% tax on employers in 2018, and additional taxes will make the UK a less attractive place to hire talent.”
WorkBuzz also raises the point about there being intense competition to attract founders and the best companies to relocate, and the UK could soon become a less obvious choice for serial entrepreneurs building their next venture.
Frost adds, “We know that the government has difficult choices to make and I don’t believe any one person has all the answers, including me. Still, the government shouldn’t view businesses as a bottomless cash cow. We need to focus on building a future-fit economy by teaching kids how to thrive in a global digital economy, tackling a growing number of people not in work, training or education and removing friction for entrepreneurs who are willing to take risks, create well-paid jobs, and drive innovation. This is what will fuel the economy and pay for our NHS in twenty years’ time.”
