Northern Ireland has one of the highest economically inactive populations in the whole of the UK.
In the first quarter of this year, there were 314,100 people who were economically inactive, making up 26.7% of the working age population.
In addition to those retired or on long term sick, this figure includes women returners, unpaid carers, discouraged workers, and those already made redundant.
People who with employment opportunities would work and in doing so, support the overall growth of our economy.
There was a time, in the not too distant past when we could have relied on large inward investment businesses to provide these employment opportunities and plug the unemployment gap.
Now the demands on the world stage for companies to have greater loyalty to setting up in their own countries and the discussion of tariffs when exporting to the US, for example, means larger companies are less likely to be a solution to the problem in the foreseeable.
So that leaves us with our own indigenous businesses, to try to address the issue, of which 89% are small businesses.
It is hard for most small businesses here to understand the mixed messages and conflicting requirements being asked of them with regard to employment.
It is just common sense that smaller businesses are going to be disproportionately hit with any increases in employer tax introduced by the UK government.
Unlike larger companies, working capital is smaller, profits are tighter and there is less of a cushion to deal with this increase in requirement.
Therefore, the need for our small businesses to find the extra funds to address the changes to employers National Insurance contributions on the back of the Autumn Budget really conflicts with our wider community need to create opportunities for the economically inactive.
The double whammy of increasing payments from 13.8% to 15% as well as lowering the employers threshold from £9,100 to £5,000 per annum, was unexpected and much more challenging than predicted.
In practice, businesses are looking at their productivity to assess where more efficiencies might be squeezed.
The immediate first choice for some has been to freeze new recruitment while others have already started to implement redundancy processes.
Sectors such as manufacturing and examining ways to have greater automation, while investments in technology, are most certainly going to become more appealing.
While all of these measures can improve productivity and profitability, they also work towards reducing the number of jobs available.
As it looks today it is hard to see how the recent increases in employers’ taxes supports the need for us to provide greater employment opportunities for almost 27% of our working age population.
- Michelle Lestas is founder and chief executive of the MENTupLEADup® technique, published author of ‘In Business With Yourself’ (Orpen Press) and a business turnaround specialist.