Small firms still creating jobs despite rising wage costs, finds FSB

Research shows the majority of small businesses have absorbed the initial costs of the National Living Wage

Recent employment figures suggest that small firms have been resilient, managing to absorb the initial costs of the new National Living Wage without cutting employment or passing the costs on to the consumer.
That’s according to the latest research by the Federation of Small Businesses (FSB), which found that the majority of small businesses (59%) absorbed the initial costs by lowering profits and making other efficiencies.
The latest UK jobs numbers show employment up by 174,000 jobs and unemployment falling to 1.63 million, down by 39,000 from the previous period, with the unemployment rate stable at 4.9%.
Wage growth has slowed slightly – with average earnings, including bonuses, up by 2.3%, a 0.1% slower rate of growth compared to the previous period.

According to the FSB, data also suggests that since the UK’s vote to leave the EU, businesses have decided to take a ‘business as usual’ approach to hiring for the time being.

Mike Cherry, national chairman of the FSB, said: “Small employers have stretched to meet the challenge set by the National Living Wage, with many paying their staff more by reducing operating margins. This will get harder for many firms in later years, with the targets set in a ‘pre-Brexit-decision’ economy.
“Negotiating a Brexit which works for smaller businesses is critical, but we must not forget the many ongoing domestic economic issues which must be tackled by the new Government. The upcoming Autumn Statement will be an important moment if we are to boost economic growth and sustain a robust jobs market.”


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Hannah Hamilton, who is a former Fife College student, is a reporter and assistant content editor for Scotland B2B, specialising in B2B news and features. She can be contacted via