Nine in 10 (89%) of SMEs reduced their workforce since the Autumn Budget, research from The Global Payroll Association shows.
The Autumn Budget in October saw the government increase the National Living Wage (NLW) and Employer National Insurance Contributions (NICs), shocking UK businesses.
The lowest paid employees have borne the brunt of these redundancies, with ‘entry level’ staff accounting for three quarters (75%) of lay-offs.
Melanie Pizzey, chief executive and founder of the Global Payroll Association, said: “The fallout from October’s Autumn Budget has been profound, and that’s before the new NLW and NIC rules have even kicked in.
“From April, these staff cost increases will become a reality, and the impact of this could well lead to even further redundancies as SMEs see the true impact for the first time.
“The government tells us that this ‘short-term’ pain is going to pave the way for long-term gain, but businesses might not have the luxury of time to find out if this is true.”
More than half (52%) of SME owner respondents admit to having concerns about the impact that increased NIC costs will have on their business, 27% of whom describe themselves as being ‘greatly concerned’.
The vast majority of these SMEs have had to lay-off between one and five employees (93%), but 6% have had to make at least 21 people redundant.
The Spring Statement Budget will be delivered on Wednesday, and it’s hoped the government won’t make any more tax increases.
Pizzey added: “With a new budget coming on Wednesday, businesses of all sizes will be hoping beyond hope that no further tax hikes are introduced before they’ve even had a chance to see how the existing increases will play out.
“And with the nation’s redundancy rate hitting its highest point in nearly five years, the government will surely be growing increasingly anxious, desperate to see some kind of positive economic outcome from this pain they are inflicting.”
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