British food companies are moving jobs to cheaper European countries in a bid to dodge employment tax increases in the UK.
Fmcg businesses with turnovers ranging from £10m to £300m are increasingly looking to fill roles internationally, according to the head of recruitment agency Lime Talent.
Dan Hodge, whose agency mainly works with fmcg suppliers, has witnessed a spike in recruitment from countries with lower average wages and employer contributions such as National Insurance.
“What we’re seeing at the moment is small and medium-sized businesses are moving positions, mainly across to Europe – places like Poland, Portugal, Spain, and The Netherlands,” he said. “Those markets are quite good from a tax and wages perspective.”
The moves respond to a barrage of cost increases this month for employers, as outlined in the Chancellor’s autumn budget.
Employment costs soar
Rachel Reeves’ October budget introduced a rise in employers’ National Insurance contributions by 1.2% to 15%, and lowered the threshold for when employers start paying the tax from £9,100 to £5,000.
The government also upped the national minimum wage from £11.44 an hour to £12.21, in place from April 2025.
Small- and medium-sized businesses are therefore ”starting to hire certain positions in Europe” Hodge said, such as “international sales manager roles or country manager if they sell a lot of products into that location”.
Other primary positions that companies have been looking to offshore include marketing and supply chain roles.
Hodge also said there had been an increase in companies looking further afield to countries like the Philippines and South Africa for non-customer-facing roles such as finance and administration.
Several food industry businesses have warned of the impact wage costs will have on their operations. Many food suppliers are also now facing an additional packaging tax with the new extended producer responsibility scheme.
Hodge said in addition to tax pressures, companies were also looking further afield because the UK labour market “is quite tough at the moment for experienced people and those with certain technical skills, so that’s also having a knock-on effect with salaries going up and up in the UK now”, particularly across mid to senior management level.
“If you can potentially bring someone in below the salary budget that you’d need to pay in London, and then you’ve got the tax benefits on top of that as well, it makes it much cheaper,” Hodge added.
Remote working
The increasing adoption of remote working was also making it more common for companies to hire internationally, he pointed out.
Offshoring certain roles or even entire departments is not new – it is something big businesses have done for years.
Just this week, Asda was rumoured to be considering shifting jobs abroad in a bid to cut costs, The Telegraph reported.
The retailer – which last year also came under fire for outsourcing more than 100 IT staff to India – launched a consultation that could involve nearly 30 jobs across customer service being moved overseas.
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