Research from the Federation of Small Businesses (FSB) has found that half (49%) of small businesses with employees on the National Minimum Wage have either increased wages in the last 12 months or are considering raising pay. The data shows less than a quarter (23%) of small firms have any staff on minimum wage, down from 27 per cent in 2012.
The FSB also found that 49 per cent of small firms already pay all their staff at or above the Living Wage. The FSB believes the Living Wage is a positive aspirational goal but thinks it should not be imposed on businesses, either through legislation or through other means such as public procurement contract terms that will only reduce competition and harm smallest firms.
FSB research shows that most small business owners will look to increase wages where they can afford to do so, and share the benefits of growth where possible. However, not all firms are currently in a position to absorb the costs of pay rises. Those in traditionally low paid sectors such as retail or hospitality, or where recovery has not fully taken hold are still struggling.
These encouraging findings come off the back of further positive results from the FSB’s Small Business Index published last week. It reported 15 per cent of small firms have increased their staff numbers in the third quarter of 2013. This is the highest figure reported since the Index began in 2010 and reflects recent improvements in business confidence.
The FSB will discuss small businesses’ contribution to the labour market at the Labour Party Conference in Brighton. Alongside IPPR, the Institute for Public Policy Research, the FSB will be asking Chuka Umunna MP, what a future Labour Government would do to support small businesses to employ more people. The session will give particular focus to helping the young, disadvantaged and long term unemployed back into employment.