The statistic that 4 in 10 small businesses have put up their prices is from a survey by the Federation of Small Businesses (FSB). They cite that small firms have done this to compensate for the rise in the National Living Wage (NLW). The FSB also say that the survey of more than 1,162 business owners shows that small firms are cutting profits, delaying investment and reducing the hours worked by staff.
The research shows that following the increase in NLW that came into force in April, the first reaction of small business owners was to pay themselves less rather than cutting staff. 7 in 10 of them, that’s 71%, decided to try and absorb the extra costs or lower profits. This is bad news for the UK economy with the knock-on effects being less investment, fewer training opportunities and higher prices.
The Low Pay Commission advises Government on what the level of the NLW should be. The FSB has urged them to remain independent, not to be influenced by political targets and suggested that any future large-scale pay goals should be implemented over a ten-year period.
The Government’s over-riding goal is to reduce poverty in the UK. The NLW is only one part of their strategy with Universal Credit, affordable housing and other aspects of policy also playing their part.
All of this has an impact on the payroll function of businesses of every size and public sector organisations. NLW, Universal Credit, flexible or reduced working hours all add to the payroll processing workload. We can show you how you will save time and cut costs by outsourcing your payroll management to Payroll Masters. Contact us for more information.