Small Firms' Recruitment Plans In Jeopardy

The likelihood of small businesses creating jobs to drive economic growth is in jeopardy, a new survey suggests, with fewer believing they will be able to employ new staff in the year ahead.

According to the latest quarterly Referendum research from the Forum of Private Business over a fifth of small business owners (22%) expect to recruit in 2011 – but confidence that they will be able to do so is dwindling compared to December 2010, when almost 30% of respondents said they planned to take on new staff.

While 14% intend to simply recruit in the coming year, a further 8% plan to hire but believe they will have to train new staff in the necessary skills their businesses require.

In addition, business owners surveyed by the Forum have identified a pressing need for external support and training for themselves and senior managers in a number of key areas, including finance, product development, employee engagement and sales and marketing.

The Forum’s Research Manager Tom Parry commented: “It is concerning that small business owners’ confidence in their ability to create jobs in the current economic climate and drive recovery is falling, and clearly there is still a pressing need to address barriers such as employment taxes and red tape, steep recruitment costs and skills issues.”

He added: “But we also need measures to support staff retention - and the upskilling of senior managers and business owners themselves. Further, policies such as the abolition of the default retirement age are unhelpful at a time we should be incentivising business growth and job creation with employment-friendly incentives.

Mr Parry concluded: “Micro, small and medium sized businesses were responsible for 65% of jobs created between 1997 and 2007, so smaller employers are crucial to job creation in this country.

“In contrast to the United States, where smaller firms are already starting to employ again, the high cost of employment, fear of making a mistake in the recruitment process and the continuing uncertain business climate are deterring our members from recruiting at this present time.”

When respondents were asked what they wanted from the Government, one fifth (20%) called on ministers to make regulations ‘fairer’ in order to give them more control over recruitment, 13% said employment law should be reduced specifically, 8% that the coalition’s ‘Employers’ Charter’ should be given more weight and 7% said that general levels of tax should be reduced.

(BMcN/GK)