Reeves’ insurance boom is encouraging firms to consider moving jobs abroad

Employers are preparing to move tens of thousands of British jobs overseas as a result of Chancellor Rachel Reeves’ latest Budget, leading recruitment experts have warned.

James Reed, chief executive of recruitment firm Reed, said companies are looking to shift roles to low-cost countries such as India to offset rising costs due to the “triple compensation” of higher employer National Insurance contributions, the increase in the National Living Wage. , and the introduction of stronger rights for unions and workers. Government analysis suggests these new employee rights could cost businesses around £5 billion a year.

Neil Carberry, the chief executive officer of the Recruitment and Employment Confederation, agreed with these complaints, and said that he had been discussing with business leaders about outsourcing after the Budget announcements. “I have spoken to many large firms where the question has always been about maritime smuggling,” he said.

These developments have heightened concerns about the potential impact of the budget on the UK economy. Despite the Chancellor’s strong emphasis on economic growth, business leaders and economists warn that these measures could hinder investment, job creation, and wage growth, fueling inflation.

Deutsche Bank has issued a note to City clients warning that the Budget could lead to the loss of 100,000 jobs, due to redundancies and job vacancies that could arise.

Mr Reed noted that outsourcing has become an attractive option for companies facing rising costs. “It’s something that people have on their to-do list, which just moved up the agenda because the cost of renting has gone up,” he explained. He also added that although companies may not announce these measures publicly, “they will happen quietly and stealthily.”

He gave the example of a white employer planning to move 27 UK jobs to India because of the increased National Insurance burden. “There will certainly be thousands [of jobs]. I think it could be tens of thousands because there are so many business services that have that as an option,” estimated Mr Reed.

The sectors most likely to be affected include professional services such as accounting, finance, recruitment and human resources. “With everything being digitally connected now, in service businesses, you can move jobs as quickly as you can move money,” he said.

The increase in National Insurance, which will come into force from April, will increase the rate from 13.8% to 15% and lower the income level at which employers start paying tax. The change coincides with a larger-than-expected rise in the National Living Wage and additional costs from the Employment Rights Bill.

Industries such as transportation, tourism, retail, and small manufacturing are expected to be most affected by these tax changes. Mr Carberry commented: “In these sectors, automation, offshoring where possible, an increase in minimum wages for those who are not on the national minimum wage, and higher prices will be used. [to offset the impact].”

The trend outside raises concerns about rising youth unemployment, which rose from 12.1% last year to 14.8% for 16- to 24-year-olds. Mr Reed expressed concern about the declining opportunities for young people to enter the workforce.

Despite facing multi-million pound costs at his company, Mr Reed said he was committed to keeping jobs in the UK. “We are very committed to the UK; we are a UK family business. I don’t want to do foreign jobs; I want the jobs to be here,” he confirmed.

A government spokesman defended the Budget’s measures, saying: “With our public services crumbling and the £22 billion legacy inherited from the previous government, we have had to make tough decisions to fix the country’s foundations and restore much-needed economic stability. allow businesses to thrive. By doing this, more than half of employers will see a reduction or no change in their National Insurance bills. There will be £22.6 billion more for the NHS, and workers’ payslips will be protected from higher taxes. This government is committed to delivering economic growth by boosting investment and rebuilding Britain.”