A major change announced in the budget is the increase in employer National Insurance contributions (NICs) and the national living wage, which will go up to £12.21 per hour in April. Large employers, such as Asda and Sainsbury’s, have already highlighted the impact, with estimated additional costs of £100 million and £140 million, respectively. Many businesses are considering how to handle these higher costs, which may mean passing on some of them through price increases for consumers.

The Bank of England has suggested that while these budget changes could contribute to a slight rise in inflation, the overall impact on the economy should be relatively small, and it may even support economic growth.

What Public Sector Job Seekers Can Expect

Public sector workers and job seekers can expect higher pay growth this year, with projected annual pay rises rising from around 2.5% to 4%, and possibly reaching 5% within the next few months. Labour’s acceptance of the independent pay review recommendations, which range from 4.75% to 6%, is a sign that the public sector is now aiming to be more competitive, especially as it tries to fill important roles and retain staff in areas that have faced recruitment challenges.

For those considering public sector roles, this means potentially better pay and more attractive benefits packages in areas such as healthcare, education, and local government, which are experiencing higher demand for qualified staff.

Private Sector: What Employers and Employees Need to Know

Private sector workers may see steadier pay growth, but employers could feel the impact of increased costs, especially smaller businesses sensitive to budget changes. Some larger retail companies, such as Tesco, expect significant additional expenses due to NIC increases, with Tesco alone estimating an added £1 billion in NIC costs over the current parliamentary term.

Government’s Strategy for Public Sector Improvements

To help manage the impact of these wage increases, the government has introduced a 2% target for productivity and efficiency savings across public services, with a focus on making improvements in key areas. This includes over £2 billion in funding aimed at upgrading NHS technology and digital services to make these areas more efficient.

With public sector pay on the rise, job seekers may find renewed opportunities in this area, while private sector employees should be aware of possible shifts in hiring and pay trends as employers manage rising costs.