East Midlands firms still confident about creating jobs

East Midlands firms are more optimistic than their national counterparts about their employment prospects for the rest of the year, according to figures released today.

The latest national Manpower Employment Outlook Survey showed a balance of plus 10% between the percentage of employers in the East Midlands which plan to hire additional workers over the coming three months and those who plan to reduce the size of their workforce.

At +4%, the national employment outlook now stands at its lowest level for three years, according to the survey.

Manpower said the figures appear to show that employers nationally are already reacting to the forthcoming implementation of the National Living Wage by scaling back their recruitment plans for the fourth quarter of 2015.

James Hick, its Managing Director, said: “An unintended consequence of the introduction of the new living wage is that firms might try to bypass the legislation altogether. We anticipate that some employers may look to mitigate the extra costs by taking on more younger or self-employed workers, who are not entitled to the national living wage.

“While on the surface this could be good news for youth unemployment, which currently stands at 16%, it could push a greater proportion of young people into low skilled jobs, resulting in an influx of less experienced workers into social care and other sectors hardest hit by the new legislation.

“Meanwhile, candidates under the age of 25 have been asking us why it is they will be paid less despite doing equal work.”

East Midlands Chamber (Derbyshire, Nottinghamshire, Leicestershire) and a delegation of its members, from a range of sectors, are meeting with the Low Pay Commission later this month. The session will form part of the Commission’s consultation on the implications of changes outlined in the Summer Budget to the National Minimum Wage.

The Chamber’s annual State of the Economy Conference, in November, will focus on the impacts of the forthcoming changes, particularly on the retail, leisure, care and certain manufacturing sectors.

Chris Hobson, the Chamber’s Director of Policy, said: “The East Midlands has created jobs at a faster pace than anywhere else in the UK over the past 18 months and these figures somewhat underplay what we have seen in official national estimates and our own survey work. While the national outlook for the rest of the year is muted, regionally, the picture is still encouraging.

“What is clear, however, is that a number of local firms have concerns about how they will afford the Government’s proposed new National Living Wage when it is introduced in April.

“While we know from recent survey work that a significant majority of Chamber members and many other employers across the region already pay their staff a living wage, we are also aware that the forthcoming implementation of a new National Living Wage may well have a disproportionate effect on smaller employers already facing financial pressures as they implement pensions auto-enrolment.

“This will be of particular concern for some sectors – such as care, hospitality and retail – and could cause a ripple effect across pay scales as it will close the differentials, meaning they may also need to up-rate other pay grades and this is what we plan to highlight to the Low Pay Commission when we meet later this month.

“Firms will also want assurances that moves to further increase the minimum wage will follow an evidence-based approach to minimise impacts on smaller firms, for which adjustment will be harder.”