Due to changes in employment legislation, 80% of UK businesses have seen their costs rise.
This is according to the British Chambers of Commerce (BCC).
Some of the new changes that have been put in place to help improve wages and working prospects for employees, such as the apprenticeship levy, pensions auto-enrolment and a new higher minimum wage, have increased business costs.
The BCC interviewed 1,400 businesses. 96% of these were SMEs and of these, 29% were from the manufacturing sector and 71% operate in the services sector.
Now the BCC have expressed concerns that the rising employment costs will in turn have a negative impact on employees – the exact opposite effect that was intended.
And the BCC are right to be concerned. The survey found that to cope with the minimum wage increase, 21% of businesses plan to reduce staff benefits whilst 25% of businesses intend to reduce pay growth for staff.
Jane Gratton, BCC’s head of business environment and skills, said: “Higher employment costs impact on the bottom line and reduce the resources available to invest in the business and its people. There comes a point at which rising employment costs can no longer be absorbed through reduced profits… Employment is just one element of the high upfront cost of doing business in the UK.”
Increases in business costs can be devastating to SMEs who already have tight profit margins. The first quarter of 2017 has already seen a rise in corporate insolvencies and these new changes to employment legislation could see many more businesses facing the prospect of insolvency.
Here at Clarke Bell, we help businesses who have run into financial trouble and need to close their company in the best way possible. For example, a Creditors’ Voluntary Liquidation (CVL) is a common course of action as it allows you to close your insolvent company, keep your business reputation intact and acknowledge your legal duties to your creditors.
If you’re a business owner and your company is struggling to cope with the new changes to employment legislation talk to us at Clarke Bell to see how we can help 0161 907 4044 / [email protected]