The Chartered Institute of Personnel (CIPD) and Development and the British Chambers of Commerce (BCC) penned a joint letter to the business secretary Lord Mandelson voicing their concerns.

The one per cent increase in NIC is meant to help shut Britain’s yawning budget deficit but the groups warn that the move would be a drag on the labour market and could curtail the Treasury’s income tax take.

The letter is written in the context of recent research from the CIPD that shows that 12 per cent of employers intend to recruit fewer staff as a result of the planned hike in employers’ NICs, while eight per cent will make job cuts.

John Philpott, CIPD chief economic adviser, said: “The combined efforts of the government, the Bank of England, employers and workers have helped limit the impact of the recession on jobs and prevented unemployment from rising as much as feared.

But it’s just as important that nothing is done to put jobs at risk during the recovery. With many employers struggling to contain labour costs this year and next against a likely backdrop of still subdued demand, the planned hike in NICs will inevitably cost jobs.

“And while the government is rightly devoting taxpayers’ money to helping Britain’s one million jobless young people, it would be absurd at the same time to raise the youth minimum wage.”

The one per cent increase in employers’ national insurance contributions is scheduled for April 2011. 

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