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8 November 2024

More than a Quarter of Small Business Consider Cutting Jobs in Wake of Autumn Budget


More than a quarter of SMEs in the UK are considering a reduction in staff numbers as a result of the Autumn Budget’s changes to employer National Insurance contributions and the National Living Wage.

The latest insight from The Global Payroll Association (GPA) suggests that changes announced in the Budget are expected to put significant strain on SMEs as the cost of hiring and retaining employees goes up.

To gauge how businesses might react to the changes, GPA commissioned a survey of SME owners to discover what measures they are planning to take to mitigate the upcoming surge in staffing costs.

When asked whether the changes to National Insurance will put financial pressure on their business, almost a third (29%) of SME owners responded ‘yes’.

But for many, the increases to the National Living Wage are even more of a worry, with nearly 1-in-5 (18%) SME owners saying they are more concerned about mandatory wage growth than National Insurance changes.

More than 1-in-5 (21%) owners say they are now more inclined to push salary sacrifice arrangements such as pension contributions, and 35% say they are now going to be less inclined to approve pay rises beyond the National Living Wage next year.

SMEs are also preparing themselves to make significant headcount sacrifices to reduce costs.

42% of owners say they are now less inclined to increase their workforce headcount next year and more than a quarter (26%) may actually have to reduce their workforce through job cuts in order to help with the additional financial strain these incoming changes present.

Melanie Pizzey, CEO and Founder of the Global Payroll Association, said:

“Due to a huge pressure to honour election promises, the Labour Government was unable to directly increase taxes on what they refer to as ‘working people’. As such, they have had to look at other ways to increase funding for the public purse, one of which is to increase National Insurance employer contributions.

“The issue here, of course, is that such an increase puts businesses under additional financial strain which will likely result in those same working people losing out on pay rises or losing jobs altogether.

“Add to this an increase to the National Living Wage and suddenly businesses are facing significant cost increases which leaves many wondering how to mitigate this increase.

“While the workforce is, of course, the biggest cost to a business, there are other ways to reduce outgoings, not least through technology integration to streamline processes and maximise efficiency. At GPA. we’re seeing this done with great success in payroll departments, and no doubt the same can be done in almost all other corners of business.”


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8 November 2024

8 November 2024

8 November 2024

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