Rising employment costs are forcing thousands of owner-managers to absorb the bill themselves, squeezing profits, pensions and hiring alike
Surging employment costs and a run of above-inflation increases in the minimum wage have left many small business owners unable to pay themselves a living wage, one of the country’s leading business groups has warned.
The Federation of Small Businesses (FSB) cautioned that thousands of owner-managers are being drawn into a downward spiral of higher costs and shrinking profits that threatens their ability to draw even the most basic income from their firms.
In a submission to the Low Pay Commission (LPC), the independent body that advises ministers on the minimum wage, the FSB said bosses were increasingly forced to cover rising pay and compliance costs out of their own pockets. The pressure, it argued, is fast becoming a permanent feature of the labour market, pushing more proprietors either to close their doors or to make choices that will damage their own retirement.
“It is becoming a major structural issue within small firms where the costs of employment, including the national living wage, employer National Insurance contributions and auto-enrolment, make it harder for a small business owner to make sufficient profit to pay themselves a living wage, let alone to fund a pension,” the submission said.
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