REC’s response to the Chancellor's Budget in full
Wednesday's Budget announcement included a range of measures aimed at boosting the jobs market and covered a number of the issues raised in the REC's submission to the Chancellor ahead of the Budget.
The following summary provides an overview of the REC's response to these employment initiatives and to other specific announcements that will impact on the recruitment industry.
A good Budget for jobs?
Reacting to the Budget's announcements on the jobs market, REC Chief Executive Kevin Green, said:
"The Budget may help employment prospects in the long-term, especially for younger workers who are entering the jobs market for the first time. However, with many of these measures not due to take place until 2010 there has to be a focus on immediate action for getting people into work. This must involve reviewing regulations and taxation that impact on job creation and harnessing flexible options such as temporary and contract work as a stepping stone back into the labour market".
"The Budget recognises the need to address the ongoing squeeze on the UK jobs market. However, the key will be to ensure that new initiatives deliver on the ground and that the Government’s approach to forthcoming regulation and taxation is consistent with a genuine focus on job creation".
Plans to tackle rising unemployment:
Commenting on the new funding measures aimed at helping job-seekers, Kevin Green said:
"The £3bn jobs package is welcomed but it must be effectively targeted. Rather than just funnelling more money into the existing Jobcentre network, it is crucial that the Government uses external expertise that is already out there. Harnessing the contribution of specialised recruitment agencies will play a key role in delivering real value for job-seekers."
On the plan to offer under 25s that have been out of work for more than a year the guarantee of a job or training:
"Specific measures aimed at helping younger job-seekers must be properly thought through. The feedback from recruitment professionals is that more needs to be done to equip those leaving school and higher education with the right skills and attitude to succeed. Whatever funding is made available, a key concern for many employers is whether new recruits can contribute effectively to the business."
Social care recruitment
Commenting on the proposals to offer 50,000 traineeships to young people aged 18 -24 in the care sector, Peter Cullimore, Chair of REC Nursing and Social Care, said:
"Over recent years, the REC has been highlighting the problems that occur as a result of staff shortages in the care sector. While we have expressed to the Migration and Advisory Committee that the current skills shortages mean some positions still need to be filled by foreign workers, training our workforce at home has to be our top priority."
Cullimore continued: "We therefore welcome the Government's commitment to offer these traineeships. We need to ensure now that this opportunity is maximised and that the training available is going to be of an outstanding quality. Our industry will have to play a vital role in ensuring that the right people are advised about how to access these training schemes, so that future carers have the right set of skills and the passion to work in care. It is important that this is not a quick fix, but the beginning of a long term strategy to tackle the shortages in our industry."
Other job-creation proposals
On plans to create green jobs, Tom Hadley, Director of External Relations said:
"The Government have promised to create hundreds of thousands of new ‘green jobs’. We hope the £1.4bn to support low-carbon industries will be effective in creating new businesses and new jobs".
Efficiency savings - potential impact on public sector recruitment
Ambitious efficiency plans have been set in train: health must find £2.3bn of savings in 2011, education £1bn and local councils £600m. Commenting, Tom Hadley, said:
"There may be a temptation to make cutbacks in areas such as recruitment costs including the use of temporary agency staff. However agency staff should not be seen purely as a cost as they play a vital role in covering for absences and filling labour shortages as and when required. There is already a squeeze on margins and we must ensure that cost cutting exercises do not jeapordise the quality and safety of recruitment services.
Implications for construction recruitment
The Budget also included a £500m package to help the housebuilding industry and a further £300 million was earmarked to fund a college building programme which could help put the construction industry back on its feet. Commenting, David Burrows, Vice Chair of the REC construction group said:
"It seems unlikely now that the Government will reach its target of 3 million new homes by 2020 and so any help to kickstart housebuilding is welcome. Public sector building programmes are going to be absolutely vital to get us through these challenging times".
But there were also plans on possible further regulation on the industry to tackle false self-employment in the construction sector. Colin Woodward, a member of the REC’s Construction Sector Group, said:
"The REC has been in discussions with HMRC over the past year with regard to how workers are engaged in construction. Agencies play a vital role in providing solutions to the inevitable peaks in workload that all construction projects create. However it is important that workers are engaged appropriately. The REC will work closely with HMRC to ensure that the new legislation does not limit access to flexible resourcing whilst effectively regulating those who are not engaging workers correctly."
Business Support measures
The Budget contains plans to extend the Business Support Service which allows members to delay payments to HMRC. The Budget will also extend a scheme to allow small business to claim back tax on previous years’ profits. Tom Hadley continued:
"REC members have been making use of the business support payment service which allows businesses to defer payments. Confirmation that this service would be maintained and measures to enhance trade credit insurance will be welcomed by the industry and were amongst the key elements of the REC’s five steps to help job creation that were sent to the Chancellor ahead of the Budget."
Vat staff hire concession
The removal of the VAT staff hire concession was confirmed in the Budget but the impact may be offset for the charity sector through a £20m boost to take a leading role in creating jobs for young people.
Implications for executive recruitment
On the Chancellor’s decision to increase income tax on people earning more than £150,000, Derek Smart of the Association for Executive Recruiters and part of the REC said:
"It will be increasingly important to attract and retain top level leadership talent within the UK in order to compete in difficult times and seize opportunities when an upturn eventually arrives. Within this context there is real concern that the new tax regime on higher earners could impact on the availability of top executive talent at a time when the top end of the job market is highly competitive at an international level".
Source : rec.co.uk Friday 24th April 2009
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