Wages Increase at SMEs say FSB

Research from the Federation of Small Businesses (FSB) shows that nearly half of small firms with staff on the National Minimum Wage have increased or are considering raising their employees’ pay.

The research also found that the number of firms who paid their staff the national minimum was down from 27% in 2012 to 23% this year.

Furthermore, the data revealed that the Living Wage is being paid to staff in 49% of small businesses.

Whilst employers are obliged by law to pay no lower than the National Minimum Wage, there is no legislation to force them to pay the higher and more controversial Living Wage which would afford employees a better standard of living.

The FSB says that the Living wage, whilst being a positive aspirational goal, should not be imposed on small businesses. Forcing the Living Wage to be paid through legislation or public procurement contract terms will harm smaller businesses, say the FSB, and will quash competition.

Recent news has indicated that the economic downturn has forced 5 million people to earn less than the Living Wage, amounting to 20% of the UK workforce.

John Allan, the FSB’s National Chairman, said of the business group’s findings:

"With confidence returning to small businesses after a period of wage restraint, our research shows our members are looking to pass on any extra profits to their staff, including those on low pay."

"Our findings also show that small businesses are already playing their part in the economic recovery by employing more staff and paying them more where possible. Small businesses are competing for good quality staff in the labour market and pay and benefits are a big part of this."

Allan did urge caution though, adding:

"However, even with the beginnings of an economic recovery, small businesses in some sectors still face rising business rates and utility bills. This means that not all firms are in a position to raise salaries and policymakers therefore need to be prudent when legislating on pay."

John Allan had words for policy makers, saying that more needed to be done to help small businesses:

"Any future Government will want to explore other ways to enable firms to pay more. This should start by coming up with a long-term enterprise policy to help create the optimal environment to do business and boost economic growth. Our education and skills system has to be better linked to the needs of the business community. This in turn will help small firms create jobs and further boost salaries."

The Federation of Small Businesses, alongside the Institute for Public Policy Research, will be discussing SMEs at the Labour Party Conference in Brighton and will be asking shadow business secretary, Chukka Umuna MP, what a future Labour Government might do to support small businesses and help to employ more people.

Currently, as tentative green shoots appear in the economy, there is pressure on small firms to increase pay. However, not all employers are able to cover the additional costs of an increase in wages. The retail and hospitality sectors, traditionally known for low-pay, are still recovering from the downturn and are expected to find it hardest to keep up with pay increases.

The National Minimum Wage will increase again on 1st October 2013.

Leave a Reply

Your email address will not be published. Required fields are marked *


You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>