Job market and economic growth: What the 2024 Budget really needs to deliver

Stimulating the job market and increasing opportunities for recruiters

There is much speculation about the UK Budget scheduled for 30 October 2024 which centres around taxation and measures to raise money to fill an alleged £22bn black hole in the national accounts. This has been the source of much politicking over fuel payments and taxation. 

However, a key message that underpinned the election of the Labour government was its intention to grow the UK out of its poor economic position. 

What does the 2024 Budget need to deliver if it is to set the wheels in motion to stimulate wholesale growth of the British economy and what measures would stimulate the job market and provide opportunities for recruiters?

Interventions to benefit the job market and recruiters

When a government is elected on a ticket of economic growth, that enshrines a promise to wealth creators – established businesses, investors and entrepreneurs. Inherently it means business-friendly interventions that enable confident investment, the pursuit of innovation, job creation, and a return to more prosperous times.

The Budget is a critical opportunity for the government. It clearly needs to balance the short-term challenge of closing the £22bn black hole, but it is imperative that it does not miss the opportunity to stimulate long-term economic growth. 

So, despite the best efforts of those seeking to distract us with divisive political spin, the Government would be well advised to start delivering on its promise to wealth creators.

For the job market and recruitment businesses, there are several areas where the Budget could be used to introduce measures that stimulate growth by promoting investment, job creation, and skills development:

Making investments in skills and training

• Upskilling and retraining – Allocating funds for nationwide reskilling programs in growing sectors such as digital technology, green energy, and healthcare is essential for boosting employability and easing the transition for workers from declining industries. There are significant opportunities for recruiters in the green sector, as well as training into tech, health and care.
• Apprenticeship and vocational training – Expanding tax incentives for businesses to offer apprenticeships and vocational training programs would directly benefit recruitment businesses by increasing the pool of skilled workers, increasing opportunities for 16-24 year olds.
• Workforce mobility support – Providing grants or tax relief to individuals relocating for employment could help to address regional employment imbalances.

Providing tax incentives for businesses

• Lower employer National Insurance Contributions (NICs) – Cutting NICs or offering NIC holidays for businesses hiring long-term unemployed individuals could stimulate job creation, directly benefiting recruitment agencies through increased demand for new hires.
• R&D tax credits expansion – Enhanced R&D tax credits encourage innovation and the expansion of high-tech sectors, which in turn creates jobs. This benefits recruitment firms specialising in tech and STEM-related roles.
• Start-up incentives – Tax reliefs or grants for start-ups and small businesses, particularly in high-growth sectors, would encourage entrepreneurship, creating new job opportunities for recruitment businesses to fill.

Investing in infrastructure

• Green infrastructure investments – Public investment in green energy projects and infrastructure such as wind farms, tidal energy, and electric vehicle charging, creates a demand for a broad range of skilled workers. This opens up a multitude of opportunities for recruitment firms in construction, engineering, and green technology sectors.
• Digital infrastructure development – Continuing investment in broadband and advanced mobile connectivity would spur growth in the tech sector, creating jobs and stimulating hiring in recruitment industries focused on technology infrastructure talent.

Supporting SMEs

• Tax breaks for hiring – Offering targeted tax breaks to small and medium-sized enterprises (SMEs) for hiring staff encourages smaller businesses to expand their workforces, driving the need for outsourced hiring services.
• Access to finance – Easier access to credit and grants for SMEs promotes business expansion and hiring, growing the need for recruitment services to meet increased demands for workers.

Increasing labour market flexibility

• Flexible work incentives – Providing incentives for companies to offer flexible working arrangements, such as tax breaks for investing in remote working enablement, would increase job participation rates. This would help those with care or parenting commitments, or disabled and long-term sick workers back into work, and expand the talent pools available to recruitment agencies.
• Reform of employment law – Adjustments to employment law that encourage temporary or contract-based hiring, while preserving workers’ rights, would expand the market for recruitment businesses specialising in temporary placements.

Supporting specific sectors

• Green jobs strategy – A clear government strategy for expanding green jobs in areas such as energy efficiency, renewables, and sustainable construction, would create demand for specialist recruitment agencies in these rapidly emerging industries.
• Health and social care recruitment – Increased funding for health and social care sectors would boost hiring needs, benefiting recruitment businesses specialising in these sectors.

Investing in innovation and digitalisation

• Digital transformation grants for businesses – Offering grants or tax incentives for companies to digitalise their operations through automation and AI integration would create demand for appropriately skilled workers, providing opportunities for recruitment businesses.
• Encouraging entrepreneurship – Expanding investment incentives in innovation hubs, start-ups, and high-tech industries such as AI, FinTech, RecTech, would create a much more vibrant environment for job creation, especially in rapidly emerging or developing fields.

Adjusting personal taxation

• Personal income tax cuts or threshold adjustments – Increasing the income tax threshold or offering temporary income tax cuts would improve disposable income, potentially stimulating consumer demand, leading to growth in sectors like retail, leisure, and hospitality. Growing the demand for workers in these sectors would benefit recruitment firms.
• Incentives for relocating workers – Offering tax reliefs for workers willing to relocate to areas with labour shortages would enhance job mobility. This would help provide opportunities for recruitment businesses that match candidates with regions in need of labour.

Addressing regional disparities

• Levelling-up initiatives – Providing funding to regions outside of London and the South East would stimulate local economies and job markets, creating opportunities for local recruitment businesses to support job creation.
• Expanding enterprise zones – Expanding tax benefits and regulatory reliefs in designated enterprise zones would attract businesses and investment, leading to job creation and recruitment demand.

Stimulating growth by encouraging innovation, incentivising hiring, supporting SMEs, and investing in key sectors is vital, bringing benefits for the job market and recruitment businesses.

Quite clearly, there are a range of interventions that the government could make to stimulate the economic fortunes of the UK, and quite simply, we cannot expect to see action on all of them. 

However, if we don’t see some considerable focus on moving the economic dial in the 2024 Budget, then a chance will have been missed to get the aspirations and ambitions for economic success over next 10 years off to a flying start.

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