The latest Close Brothers Business Barometer has revealed that 51.2% of SMEs say they’ve got no plans to take on new staff this year.
For those that do plan to take on new staff, 22.9% of businesses say they are looking for temporary workers or freelancers rather than hiring permanent employees.
Business uncertainty is thought to be the cause of this reluctance, with the costs of hiring a new employee adding more strain than many small businesses can handle at the moment.
58.6% of SMEs said that they were concerned about the cost of hiring in the current state of the economy. 15% of these said that their concerns were significant or major.
David Thomson from Close Brothers Invoice Finance said that “while the UK’s economic performance during the second half of 2016 was strong compared to other leading economies, many SMEs worry that this may prove not to be sustainable.”
“They are reluctant to take the risk of hiring new staff because they are not convinced revenue growth will justify the extra expense of additional employees,” he added.
Brexit Effect
The effects of Brexit are still very much adding to the concerns and wariness that many business owners still face. 19.2% said that they would be hiring fewer employees due to Britain’s vote to leave the EU. In comparison, 10.4% said that the Brexit vote had actually encouraged them to hiring new workers.
Thomson added that many businesses were waiting to see what the long term implications of the vote to leave the EU would be before making any drastic business decisions or recruitment plans.
“They just don’t know yet whether there will be sufficient work for new employees and having been forced to make workers redundant in recent times, they’re opting to take a wait-and-see approach to hiring.”
Past Workforce Problems
Another reason for businesses’ hesitancy to hire is because of how commonplace redundancies have been for many organisations. In the past five years, almost half, 45.6% had been forced to make redundancies. With business uncertainty and past experiences like this, it’s understandable that so many businesses are shying away from expanding their workforce.
However, this caution could also be hindering the growth of many companies. While reluctance might be understandable, Thomson believes that this will end up doing more harm than good, with poor business confidence leading to a self-fulfilling prophecy.
“Our research suggests large numbers of SMEs plan to freeze hiring during 2017, which will mean few new jobs are created and economic growth falters.”
Are you planning to hire in 2017 or will you be avoiding it? How have current affairs impacted your decision? Let us know your thoughts in the comments!