MANY business owners are planning to cut recruitment and increase redundancies in response to increases in National Insurance contributions and the minimum wage, a survey has found.

However, the TUC warned businesses that their reasoning was misguided.

In a report published today, the Chartered Institute of Personnel and Development warns that businesses are being hit by the increased contributions in the Employment Rights Bill.

One in three businesses that expect their employment costs to increase has plans to reduce staff headcount through redundancies or recruiting fewer workers — and two in five warned that they will raise prices, the report found.

Institute chief executive Peter Cheese said: “If the government’s plans are to succeed, it’s vital they set out how they will help businesses to support growth and investment and it’s important this support is felt across the economy.

“Our data shows it’s the everyday economy sectors, such as retail and hospitality, which employ large numbers of people, that will be particularly affected by impending increases to employment costs.”

But TUC general secretary Paul Nowak defended the government’s plans, saying: “Many of the warnings being issued against the Employment Rights Bill are the same discredited ones that were voiced against the introduction of the minimum wage 25 years ago.

“They were wrong then and they are wrong now. We cannot continue with the same broken status quo.

“Britain’s low-pay, low-rights economic model has been terrible for living standards and growth over the last 14 years.

“The government’s workers’ rights plans are common-sense reforms that will drive up labour market participation, improve health, raise productivity and put more money into people’s pockets.

“They are good for workers, business and the wider economy.”