TaxCorporate TaxCambridge fellow slams NI detractors

Cambridge fellow slams NI detractors

Dr Mark Hayes says those railing against the proposed rises to national insurance are missing the big picture

An economics experts has hit out at business heavyweights’ protests against
the
planned
National Insurances rises
.

Dr Mark Hayes, a fellow at Robinson College, Cambridge said detractors were
not seeing the big picture, because the UK economy would balance out the
changes.

“How can the captains of industry, great employers of labour be wrong about
the effect on employment of an increase in national insurance?” Dr Hayes said.

Dr Hayes said there would be two knock- on effects of an NI rise:

Domestic labour would be more expensive compared to foreign and more labour
intensive companies would need to raise prices relative to the less
labour-intensive.

The first movement could be offset by reducing exchange rates.

Dr Hayes said: “The second effect may in theory lead to a transfer of
employment from one sector to another…. All change has implications for the
composition of employment, which is in constant flux, and the increase in NI may
indeed affect employment in particluar companies, some losing, some gaining
jobs.

“The mistake is to argue that a change in average labour costs can affect the
level of employment as a whole.”

Further reading:

National
Insurance: a pretty odd debate

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