HR · 5 October 2015

Small firms criticise Conservatives’ national living wage and childcare policies

Working grandparents will be allowed to share parental leave pay to help care for grandchildren
Working grandparents will be allowed to share parental leave pay to help care for grandchildren
Small firms have criticised Conservative policy proposals for the new national living wage and changes to parental leave, and said they will make changes accordingly to prepare for this.

The survey of 1, 261 businesses by the FSB found that 38 per cent feel the wage rise will negatively impact on their firms, with six per cent saying they thoughtit would have a positive impact. More than half said they would delay hiring new staff, while half of the firms confirmed they would raise prices.

Two in five intend to cut staff hours, while nearly a third will reduce their number of staff or put off planned investment. Around a quarter of small firms said they would have to freeze or cut the wages of higher paid staff in order to manage the cost.

The changes to the national living wage could see a small shop with six employees see its annual wage bill rise by 5, 900 even after reductions in the amount of national insurance employers have to pay from next year are taken into account.

Of those surveyed by the FSB, under a third said they would absorb the cost themselves through reduced profits.

The living wage of 7.20 an hour for over-25s comes into force from April 2016 up from 6.70 for those over 21 and will rise to 9 an hour by 2020.

The businesses expected to be most affected are wholesale and retail, accommodation and food services.

The FSB chairman, John Allan, said: Over half of our members already pay their staff above the voluntary living wage, but those that don’t are often operating in highly competitive sectors with very tight margins.

He added that in many of those industries the only sustainable way to deliver real long-term wage growth is to improve productivity.

Without this, Allan warned there was a real risk that higher enforced statutory wages will lead to fewer jobs being created and, unfortunately in some cases, to job losses.

Other business lobby groups have criticised another of the Conservatives’ proposals, with George Osborne announcing that grandparents would be eligible to share leave with working parents in the future, at the party conference in Manchester. Adam Marshall, the executive director of policy and external affairs at the British Chambers of Commerce, said: Another change to parental leave policy is the last thing businesses need after a decade of upheaval.



Rebecca is a reporter for Business Advice. Prior to this, she worked with a range of tech, advertising, media and digital clients at Propeller PR and did freelance work for The Telegraph.

On the up