A third of small businesses are planning to axe jobs amid worries over soaring staff costs, while new employment rights are also set to see firms rein in hiring and trim their workforces, according to new figures. A poll of nearly 1,400 firms by the Federation of Small Businesses (FSB) in the final quarter of last year revealed that 33% expect to reduce their workforces, up from 17% in the previous three months.
A separate survey of 1,270 small companies also found that over two thirds – 67% – would curb hiring in the face of the incoming Employment Rights Bill, with nearly a third – 32% – planning to reduce the number of employees they have before the new measures come into effect.
It found that three quarters – 75% – of small employers flagged worries over new laws relating to unfair dismissal changes, while 74% raised worries about changes to sick pay. Tina McKenzie, FSB’s policy chair, said: “The figures speak for themselves – plans to allow employees to sue their employers on their first day on the job will wreak havoc on our already fragile economy, while changes to Statutory Sick Pay will make employers think twice about their hiring plans.”.
She added: “If taking on staff becomes a legal minefield, businesses will simply stop. “That means more people on benefits, a ballooning welfare bill, and a devastating hit to living standards.”. The Employment Rights Bill also comes as firms face pressures from soaring labour costs, with the Government increasing national insurance contributions for employers from April, alongside another minimum wage hike.
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