The latest insight from The Global Payroll Association (GPA), reveals that 89% of small-to-medium sized businesses (SMEs) in the UK have reduced their workforce since the Autumn Budget of October 2024.
The government’s Spring Statement Budget will be delivered on Wednesday 26th March. It will be the first budget since the now notorious Autumn Budget in which the government announced increases to the National Living Wage (NLW) and Employer National Insurance Contributions (NICs) that have sent shockwaves through UK businesses and resulted in a vast number of employee layoffs.
So, as the UK’s SMEs gear up for the forthcoming economic statement, hoping that no more tax initiatives are introduced that will further increase their cost pressures, GPA has surveyed SME owners in the UK* to find out exactly what staff-cuts they have so far had to implement in order to mitigate the impact of the cost increase that will kick-in next month.
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’.
As such, an astonishing 89% of SMEs have been forced into staff redundancies as a direct result of the Autumn Statement.
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.
It seems that the lowest paid employees have borne the brunt of these redundancies, with ‘entry level’ staff accounting for three quarters (75%) of lay-offs.
Mid-level staff account for 9% of redundancies, and C-suite or Executive positions account for another 9%.
These SME layoffs have contributed to an increase in the UK’s overall redundancy rate. Between Q3 and Q4 2024 (latest available data) the rate increased from 3.2 to stand at 3.9. This is the highest redundancy rate the UK has seen since Q1 2021 when it stood at 5.5.
Melanie Pizzey, CEO and Founder of the Global Payroll Association, says:
“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. 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.”