New research has discovered that a lot of private sector employers, including some contractor accountants, are thinking of reducing holiday entitlement to cut the cost of employee benefits.

Insurance provider Metlife surveyed 403 SMEs and found that 27% think holiday entitlement is too generous and 25% are thinking about reducing paid holiday leave.

Full-time workers in the UK are entitled to 28 days paid holiday per year, including bank holidays. Employers would like to cut 4 days paid leave to reduce costs and 36% say they are thinking about offering staff additional unpaid leave.

Dominic Grinstead, the MD of MetLife, said employers are questioning the value of employee benefits packages and paid holidays form an expensive part of the bundle. A lot of employees show that they are prepared to be flexible, but they do want something in return.

The survey also found that more than 33% of employees would work longer, but only if they received more money. However 60% of employees do not think they will get an annual salary increase in the next year and 28% have not seen their wages rise for more than two years.

Public sector employees are facing a salary freeze and although some private sector wages are increasing, the average 3% settlements are below inflation. 16% of private sector organisations are operating pay freezes, 31% intend to offer increases below RPI inflation and 17% say they will offer targeted salary rises for some of their employees only.

John Cridland, the CBI’s director-general, said he was confident that growth in the private sector will compensate for public sector job losses but inflationary pressures are causing the majority of employers to make tough decisions when it comes to pay.

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There’s been a lot in the news recently about the high lack of morale amongst employees working in the private sector but one leading industry body believes it has come up with a solution to the problem.

The Forum of Private Business advises organisations to hold corporate conferences as these will not only boost employee morale, but also increase product sales in the long run.

FPB spokesman, Phil McCabe, said you should never underestimate the value of team building exercises and other activities that bring employees and management together. However, for small enterprises this can be a difficult proposition due to a lack of space and resources to hold such conferences.

As with everything, it pays to shop around, he advises. There are several conference providers who will let organisations hold these events without needing to go into the red. McCabe said group functions are vitally important in small organisations because individual employees play essential roles in the company’s future.

Recent surveys have discovered that around 50% of the UK workforce feels undervalued at work. For a large proportion of these employees, the stress associated with increased workloads is to blame. They believe their employers have no interest in their health and wellbeing until they are off sick. Many say they would like to receive benefits such as gym membership and several are prepared to change jobs in order to get a better benefits packages.

It’s time employers sat up and took notice of their employees‘ wellbeing and organising corporate conferences could well be one solution.

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The Institute of Directors has criticised the coalition for failing to reduce the burden of tax on small businesses. Tax – the Weighty Burden, the annual report from the Institute, calculates that the true burden of taxation for SMEs is between 32% and 43%.

This burden is unlikely to reduce even when corporation tax rates decrease in 2014 because employers have to pay additional fuel duty, national insurance and business rates.

The head of taxation at the IoD, Richard Baron, said the burden of taxation is weighing growth down. Although it is not possible to make radical cuts at the moment, the government should already be making plans to reduce the heavy burden of business taxation.

Baron believes corporation tax needs to be lower than originally planned and employers’ NICs should also be reduced.

However, a recent report from the TUC suggests that cutting corporation tax further would have an adverse effect on the economy and job creation.

George Osborne believes that reducing the rate of corporation tax will entice companies to set up in the UK, which will help drive the recovery in the private sector. But Brendan Barber, the TUC chief, says this argument does not stand up.

The rate of corporation tax in the UK is already amongst the lowest in Europe. The OECD average is 26.5%, but in excess of 90% of small businesses in the UK pay 20% and the average for large organisations is 23.2%.

Barber said that we have extremely competitive corporation tax rates already. He went on to point out that some people, including Osborne, have been talking about emulating the aggressive low tax policies of Ireland, but the current economic problems there suggest that this is not a sensible option.

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26% of employers do not intend to increase salaries this year as sluggish private sector growth and public sector austerity measures impact companies’ capacity to reward their employees.

The latest annual Reward Survey from the CIPD shows that while 99% of employers will not be cutting pay this year, only 65% will actually be increasing it. A further 9% have delayed their review of salaries.

60% of respondents said market rates were the most important factor when it came to determining salary levels and 61% link pay to individual performance, at least in part.

67% of organisations operate reward schemes that are performance-related and the most common options are pay rises based on merit and individual bonuses. 29% also operate non-monetary awards for individual clerical and manual members of staff.

The CIPD’s performance and reward adviser, Charles Cotton, said it’s not surprising that some companies are not able to award salary increases this year. The survey results also show that employers are focusing more on linking pay and bonuses to performance.

Meanwhile, private sector pay edged up by 3% in the first quarter of this year. Inflation is hovering around 4.5% so the rise doesn’t fully compensate but it is an increase which is something public sector workers currently yearn for.

The increase in private sector pay has been led by the automotive and utilities sectors. 3% is still well below the CPI rate and when you factor in the freeze in public sector pay, the average comes out at 2.5%.

Experts are now predicting that the Bank of England will hold the base rate at its historic low of 0.5% until at least November. With inflation rising faster than wages, take-home pay will continue to shrink for a while yet.

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The UK government has pledged to reduce red tape and yet its latest proposals to change parental leave and flexible working will increase bureaucracy, according to the FSB.

The Federation of Small Businesses has expressed its concern that the coalition’s plans to introduce changes to parental leave and extend flexible working will damage small businesses.

Although the FSB has been calling for reform of the parental leave regulations, the government’s proposed solution of allowing parents to take chunks of leave, instead of one block, would make it far more complicated to administer.

The government has launched a consultation on the proposals and the FSB will be contributing by expressing the opinion of small businesses.

The FSB’s national chairman, John Walker, said that despite promising to ease the burden of red tape, the government plans to introduce additional complexity which will make things even more time confusing and complicated for small businesses.

It will be extremely onerous for small firms and limited company contractors to organise workloads and cover for an employee who decides to take parental leave in chunks rather than a continuous block of time. The majority of small businesses already allow flexible working and the FSB urges the government not to make it mandatory for employers to consider requests for flexible working after a 26 week qualifying period as it would pile yet more red tape on them.

David Cameron wants the private sector to drive the economic recovery but changes to these regulations could further deter small businesses from hiring more staff, Walker concluded.

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The latest ‘Employee Outlook’ survey from the CIPD suggests that UK workers are feeling increasingly insecure about their jobs.

21% of employees now think it is likely that they will be made redundant as a result of the recession, a rise of one percentage point on the previous quarter.

Not surprisingly, the highest level of concern is found in the public sector, with 30% of employees believing they are likely to lose their job. 27% of those in voluntary sector share the same sentiment but only 19% of private sector workers express concern.

Job satisfaction fell five points during the quarter to +34. Employees in the voluntary sector are most satisfied whilst those in the private sector are least satisfied.

The survey also discovered that 24% of respondents were looking for a new position with a new company, up from 19% in the previous quarter.

Research from staffbay.com suggests that figure could be even higher. It claims that since the two consecutive bank holidays, there are now four times the normal level of people looking for new employment.

The founder of the online recruitment platform explained that bank holidays give us the chance to reflect on our career path and back to work blues hit people strongly enough to encourage them to apply for new positions.

However, according to the latest Reed Job index, there was a 2% drop in vacancy numbers last month. Since December 2009, 25% more job opportunities have been created in the private sector and year on year demand is 22% higher.

Demand in banking and leisure and tourism fell back last month whilst customer service, engineering, IT and manufacturing were among the sectors to record an increased job demand.

The bank holidays may have played a part in the drop in demand as UK businesses experienced a disjointed period with the two long weekends, suggested the MD of reed.co.uk, Martin Warnes.

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Contractor accountants could receive an unexpected, but welcome, surprise when it comes to bonus time this year.

A recent survey of 500 businesses revealed that UK accountants and other professional finance workers are likely to get a Christmas bonus of around 10.8% of their annual base salary. As the average salary for accountants is £42,000, the average bonus will equal £4,536, which is nearly £900 more than they were expecting. The total bonus pot will be £1.3bn, based on the amount of private sector qualified accountants.

60% of businesses plan to give their finance staff a bonus this year and 80% say they will either award a bonus or increase salaries in 2011. Only 20% are not planning to offer some form of salary increase or performance related pay in the next 12 months.

However, accountants may not get everything they wish for. When questioned about their salary expectations in 2011, an average 5% salary increase was predicted. Businesses on the other hand said that if they did award a salary increase it would be an average of 2.6%.

An accountant’s life isn’t necessarily a happy one. Apparently, many turn to drink or drugs to help forget the
stress of office life.

The Chartered Accountants Benevolent Association exists to offer accountants assistance on a range of issues. Traditionally, older accountants availed of its services when they neared retirement but in recent years the CABA has seen an increase in calls from younger accountants with problems such as alcohol and substance abuse.

The CABA’s chief executive, Kath Haines, pointed out that many of the younger callers not only found the recession hard to cope with but also suffered family, health and financial problems. In a recent survey of 1,126 accountants, the majority of them said stress, the long working hours and resulting imbalance between work and social life were their main concerns. At least freelance accountants should be able to get a more suitable work/home life balance!

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In what seems to be a contradiction of other recent reports, the latest quarterly job survey from the CIPD and KPMG claims that public sector redundancies will be more than offset by new private sector jobs.

The latest Labour Market Outlook recorded a figure of +11. This figure is a based on the number of employers planning to increase their workforce compared to those who plan a decrease. Whilst the public sector recorded a negative figure of -44, the private sector registered +39. In the summer the balance was +2 and we have now seen three consecutive quarters with a positive balance.

The chief economic adviser for the CIPD, Dr John Philpott, said there are now encouraging signs of increased buoyancy in the private sector job market. However, he did point out that it remains to be seen whether this will continue after the pre-festive season jobs surge and he didn’t go as far as to rule out a rise in unemployment next year.

Sectors that expect to increase recruitment levels during the final quarter of the year include manufacturing (+51), IT private sector services (+71) and consultancy (+44). Decreases are expected in central and local government (-95 and -65 respectively) and transport and communications (-39).

41% of public sector bodies will be making redundancies before the end of 2010 and these are expected to affect 14% of their employees. Whilst the average cost of making an employee redundant is £12,000, in the public sector it is £19,600 as opposed to £9,350 in the private sector.

Obviously everybody hopes that the latest LMO data is concrete evidence that we are witnessing a sustained improvement that will enable the private sector to absorb the public sector fallout.

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The Reed Job Index reached its highest level in six months in September; which will come as welcome news to contractor accountants and anybody else who is seeking a new position.

Across the UK recruitment activity rose by 2%, raising the Index to 104, the second highest level since Reed began compiling these statistics last December.

Salaries have not yet recovered to the same level as they were at the end of last year when Reed set the Salary Index at 100, although they recorded a 1% increase to 96 last month.

The Reed Job Index is compiled from data from reed.co.uk, the largest job board in the UK, which lists more than 90,000 job vacancies on a daily basis.

Customer service, digital and creative, leisure and tourism and IT and telecoms were amongst the sectors showing the greatest demand whilst public sector opportunities understandably declined.

On a regional front, the East Midlands, Scotland and Yorkshire and Humberside all experienced accelerated growth in vacancies, with the Index in those areas reaching its highest ever level.

Whilst this is obviously good news for job seekers, the Institute for Public Policy Research has released data that shows prospects for the long-term unemployed have not improved. In fact the amount of people classed as long-term unemployed has doubled over the past 2 years to 797,000.

The ippr data notes that there is a jobs deficit of 330,000, which threatens the capability of the coalition’s Work Programme to help people get back into work.

Under the scheme, contracts worth £3bn are to be awarded to voluntary and private sector providers. However, more than 5 people are currently chasing every one of the UK’s job vacancies.

Nick Pearce from the ippr said that one solution could be a localised and flexible system offering a highly personal service to the long-term unemployed.

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There’s been a lot said recently about clamping down on the amount of migrant workers allowed to enter the UK. Despite this, the latest CIPD/KPMG Labour Market Outlook report suggests that as the UK labour market improves, so does the employment demand for migrant workers.

600 employers took part in the survey and 45% of them said they have experienced difficulties in recruitment. Engineering, IT and accountancy positions are hardest to fill and consequently 17% of employers intend to hire migrant workers during Q3. 21% have recruited migrant workers in the last 3 months and of those workers, 37% came from outside the EEA.

Offshore outsourcing also seems to be making a comeback with 9% of private sector enterprises intending to offshore jobs over the coming 12 months. India is still the most common offshoring location, followed by China and Eastern Europe. Call centres, IT and finance are amongst the most likely functions to be outsourced abroad.

The public policy adviser from the CIPD, Gerwyn Davies, pointed out that it will take time to train British workers to fill the positions currently being occupied by skilled migrant workers. He believes that the proposed migration cap should be phased in gradually so as not to harm our competitiveness.

There is currently a temporary visa cap on all new Tier 1 applicants and applications for Tier 2 visas are limited by the issuance of Employer Sponsorship Licences. The permanent cap on UK visas will be introduced next April.

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The Audit Commission is to be scrapped, Eric Pickles, the communities minister, announced last Friday.

The commission employs about 2,000 people to monitor the performance and accounts of public sector bodies. The government claims that shutting it down will save around £50m a year.

This move is likely to benefit the private sector as councils and other public sector bodies will be able to tap into the open market and appoint their own external auditors. By outsourcing audit expertise, the government hopes to cut back on the centrally imposed bureaucracy and costly auditing, thus saving money for council tax payers.

The National Audit Office is to set up a new auditing framework to ensure public sector bodies are still subjected to robust auditing.

Pickles said that the Audit Commission is no longer a watchdog looking after the interests of the taxpayer; rather it has become a creature of Whitehall. This new plan goes together with proposals to create an army of local people who will hold local bodies to account when it comes to spending tax and delivering value for money services.

The Audit Commission, probably understandably, is less than optimistic that this new approach will work. Michael O’Higgins, the Commission’s chairman said the department had more than fulfilled its aims since it was set up by Michael Heseltine and the Tory government in 1983.

The ACCA believes the move will prove costly and lead to inconsistencies in local government reporting. The head of public sector at the ACCA, Gillian Fawcett, pointed out that although a lot of the Audit Commission’s work is currently contracted out; the commission ensures that reporting is consistent.

Whilst this move will undoubtedly benefit some private sector accountants and contractor accountants, the general feeling on the street is that the work will go to the larger accounting firms rather than smaller local businesses.

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Ambition, the international finance and accounting recruiter, believes that contractor accountants and finance staff working in the public sector will be badly hit by cuts in public spending.

There are currently around 140,000 permanent employees, freelancers and contractors in the public sector and Ambition predicts that around 11.5% will lose their jobs and many of those will be unable to find work in the private sector.

In total, it is thought that as many as three quarters of a million jobs will be lost in the coalition’s bid to reduce public spending by £6.2bn this year.

The MD of Ambition in the UK, Tim Gilbert, pointed out that the majority of public sector finance professionals do not have the cut and thrust attitude required by the banks and City financial institutions. Those candidates with commercial acumen will be quickly snapped up but many will fall by the wayside.

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