Exclusive MT Survey: SMEs won't be picking up the public sector job slack

The Government hopes the private sector will start hiring as the public sector starts firing. But SMEs beg to differ, at least in the short term.

by Hannah Prevett
Last Updated: 19 Aug 2013
We’ve heard a lot from the Coalition recently about how entrepreneurship is the answer to the UK’s economic woes. He told the CBI conference just weeks ago that he envisaged a future where new start-ups could ‘flourish’, ‘drive growth’ and ‘create jobs’. With 500,000 public sector jobs expected to be lost, that means we'll need a whole lot of high-growth start-ups to avoid the dole queue expanding exponentially. However, research conducted exclusively for MT by omnibus specialist BDRC Continental shows that 85% of SMEs aren’t planning to take on any new staff in the next three months. Doesn’t bode well…

Our Small Business Omnibus survey showed that just 9% of SMEs are planning to add to their headcount in the next quarter. In fact, almost as many (6%) said they were planning cutbacks themselves. Although the bigger the company, the greater the chance that they’ll be taking people on: companies with 11 or more staff and a turnover of more than £250,000 seem to be the most likely to pluck people from the Jobcentre queue.

That said, the Prime Minister may not need to fret just yet. Research released by the London Chamber of Commerce and Industry earlier this month found that the majority of London-based entrepreneurs are planning to invest in growth in the next two to three years (just 30% weren’t). So although most entrepreneurs are sitting on their hands for now, it could be a different story further down the line. That's backed up by our survey, which also found that around 35% of firms are more optimistic about the economy than they were three months ago, and a similar number are expecting business to take a turn for the better in 2011.

But if the Government is really going to persuade small companies to invest in growth, it may have to go further than spending money on infrastructure and its much-heralded centres for innovation (though that's a decent start). What do entrepreneurs really want? Less red tape, for a start: a quarter of SMEs reckon the Government should start by taking the axe to health and safety legislation, while a further 19% thought tax compliance was the place to start. Hopefully, reducing the compliance burden will save money and free up entrepreneurs to do what they’re best at, i.e. running their business - while shelling out lots of tax and hiring lots of ex-civil servants in the process.

It might also mean that they have some time to take a much-needed holiday, which according to MT’s study is top of the wishlist for entrepreneurs in search of a better work/life balance. Although interestingly, the third most popular answer to that question was: stop worrying about work/ life balance. Go figure.

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