Staff at small businesses suffer falling wages
Staff at small and medium-sized companies (SMEs) saw their wages fall at the end of March, new analysis suggests, as firms wrestled to absorb the impact of Chancellor Rachel Reeves’ national insurance tax hikes.
Data released by the Office for National Statistics this week suggested that wage growth across the wider UK economy has exceeded five per cent in every month since September last year.
But workers at smaller firms specifically are facing the consequences of the government’s £25bn tax grab, according to figures from HR platform Employment Hero shared exclusively with CityAM which tracked a decrease in median full-time pay across 105,000 SMEs.
Its research suggested staff were earning as much as £250 less a year than they were at the end of December.
Workers in manufacturing saw the biggest drop in median full-time wages, along with the transport and logistics sectors. Together they saw an average decrease in pay of around 2.6 per cent per month.
Employment Hero’s managing director Kevin Fitzgerald said the decrease in staff’s wages were “particularly alarming” amid tax hikes and looming US tariffs.
“These businesses are clearly making difficult decisions to maintain competitiveness in an increasingly challenging trade environment,” he said.
“What’s most concerning is that workers are facing this wage stagnation at a time when living costs remain high.”
The ONS released hotter than expected wage data last week. But it was largely being driven by the public sector after the government made a series of agreements with union bosses to increase wages for the likes of teachers and train drivers.
That compares to workers at firms employing fewer than 500 staff, who earn less than £40,000 on average, according to Employment Hero.
In the wake of Reeves’ Autumn Budget last year, Resolution Foundation researcher James Smith warned that workers should expect lower wages as a result of the tax hikes.
Reports by the Bank of England suggested that pay rises on a national level could wind down to four per cent.