It's business as usual for SMEs despite challenges
The latest rise in employment suggests that UK businesses have absorbed the new Living Wage and have held their nerve following uncertainty over Brexit.
The latest UK jobs figures from the Office for National Statistics (ONS) show employment is up by 174,000 jobs and unemployment has fallen to 1.63 million. Wage growth has slowed slightly - with average earnings, including bonuses, up by 2.3%, a 0.1% slower rate of growth compared to the previous period.
The Federation of Small Businesses (FSB) says these figures tally with its own research and that they support its finding that small firms have managed to absorb the initial costs of the new National Living Wage without cutting employment or passing on the costs to the consumer. The FSB data found that the majority of small businesses (59%) absorbed the additional costs by lowering profits and making other efficiencies.
It also means that since the UK's vote to leave the EU, businesses have decided to take a "business as usual" approach to hiring for the time being, according to the FSB.
"Small employers have stretched to meet the challenge set by the National Living Wage, with many paying their staff more by reducing operating margins," said Mike Cherry, FSB national chairman. "Negotiating a Brexit which works for smaller businesses is critical, but we must not forget the many ongoing domestic economic issues … the upcoming Autumn Statement will be an important moment if we are to boost economic growth and sustain a robust jobs market."
However, the UK jobs market could be about to weaken, according to Suren Thiru, head of economics at the British Chambers of Commerce (BCC). He said: "With employment rising sharply and unemployment continuing to fall, the latest figures confirm that the UK jobs market remains in good shape. However, while one must not give undue weighting to a single month's figures, the rise in the claimant count suggests the labour market could begin to soften in the coming months if this trend continues."
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