Temporary solutions could be one of the answers to rising costs and helping to mitigate redundancies...
As we head into 2025, many businesses are bracing themselves for a tough year ahead. The recent Autumn budget has left companies feeling uncertain about their future, with concerns around hiring freezes, price hikes, and reduced pension contributions. But one of the biggest worries is the risk of workplace redundancies… However, this landscape also offers a unique chance for businesses to re-evaluate their talent needs and unlock new potential within their teams.
In this article, we'll explore the reasons behind the rise in redundancies and what it means for businesses and employee and more importantly, how businesses and employees can navigate these challenges through strategic hiring and collaboration.
Tax Increases
One of the main factors contributing to redundancies is the increase in National Insurance contributions (NICs) for employers. This, combined with the rise in the National Minimum Wage (NMW), is putting pressure on businesses to cut costs. According to research, 26% of businesses plan to make redundancies in 2025, with many citing the increased taxation as a major reason. While tax increases can be challenging, they can also encourage businesses to find innovative ways to improve efficiency and cut unnecessary expenses. This could lead to a healthier long-term financial strategy and foster a greater focus on sustainable practices. Moreover, higher wages can lead to improved employee morale and productivity.Consumers are Getting Budget-Conscious
The cost of living crisis is also playing a significant role in the rise of redundancies. With 31% of businesses citing this as the primary reason, it's clear that consumers are becoming more budget-conscious. Research shows that 70% of UK consumers are looking for ways to reduce their spending, making it harder for businesses to stay afloat. This shift in consumer behaviour can prompt businesses to recalibrate their offerings, encouraging them to become more customer-centric. It presents the opportunity to innovate and develop products or services that deliver greater value to consumers, ultimately strengthening customer loyalty and engagement.
Competition is Getting Tougher
Another major challenge facing businesses is the increasing competition. With 23% of businesses citing this as a negative impact, it's clear that standing out from the crowd is getting tougher. Small businesses and SMEs are struggling to compete with larger organizations, and this could ultimately lead to redundancies. In the face of tough competition, businesses are often spurred to innovate, leading to improved products and services across the board. This competitive environment can also lead to collaborations and partnerships, fostering a community spirit among businesses striving for success against common challenges.
Factors Contributing to Redundancies
* Increased competition
* Cost of living impacting consumer demand
* Increased taxation
* Wage inflation/employee requests for increased wages
* Working capital challenges
* Funding capital challenges
* Global economic change
* Global political uncertainty
What Does This Mean for Businesses and Employees?
The rise in redundancies is a worrying trend for both businesses and employees. With so many factors contributing to the problem, it's clear that companies need to think carefully about their strategies for the year ahead. For employees, the uncertainty around job security can be stressful and unsettling. It's essential to stay informed about the latest developments and to be prepared for any eventuality. This challenging environment encourages businesses to prioritize employee development, investing in training and upskilling to remain competitive. Employees can view this as an opportunity to reflect on their own career goals, considering ways to enhance their skill sets and adapt to new roles that may emerge. By fostering a mindset of growth and adaptability, employees can navigate these challenges more effectively.
Solutions – evaluating each role and internal processes to maximise productivity.
Utilising temporary labour or contractors for core projects and peaks in workload, as well as identifying skills and having the option to take on permanent once proven. Cooper Golding can also help with anyone who is being made redundant, certain sectors are very busy such as Aerospace, Renewables Defence, Waste and Food as well as Life Sciences, so skills which could be transferable into these areas are still key.
We would love to hear your thoughts and here at Cooper Golding we are working with clients and candidates to ensure best possible solutions for all.
