Recruiters say George Osborne’s abolition of employer National Insurance Contributions (NICs) for workers under the age of 21 is encouraging news for their sector.
The chancellor announced the cut yesterday (December 5) as part of his Autumn Statement, in which he also claimed that Britain’s long-term plan for economic growth is working.
Going on figures from the Office for Budget Responsibility (OBR), Mr Osborne said the economy will grow by 1.4 per cent in 2013, up from an initial prediction of 0.6 per cent, before growing 2.4 per cent in 2014.
According to telegraph.co.uk, the OBR says this will be followed by growth of 2.2 per cent, 2.6 per cent, 2.7 per cent and 2.7 per cent in the years thereafter.
Although news of economic growth is always positive for the recruitment industry, companies in the sector are looking to the new NIC rule to have a more direct impact on their prospects.
Recruiter.co.uk says companies will not have to pay any NICs on workers under the age of 21 earning up to £813 a week, or collecting an annual salary of £42,300.
A number of firms have said this move will help free up the funds small-and-medium sized businesses need to invest in their workforce.
SMEs are currently providing six in every ten jobs around the private sector, meaning this move could fuel a huge rise in employment.