According to FSB 47% of SME’s identified wages as the main contributor to the rising costs of doing businesses.
It has been reported that 65% of SME’s have seen a decline in profit since the latest national living wage rise.
On the 1st April 2017, the National Living wage rose from £7.20 to £7.50 per hour. The Federation of Small Businesses has reported that 39% of businesses have had to raise prices to cope with the wage increase. 24% of small businesses have either cancelled or scaled down investments as a result of the national living wage alterations, while 22% reduced working hours or hired fewer staff.
Previous findings from FSB in 2016 revealed that 59% companies absorb the rising costs by reducing profitability.
Retail, wholesale, hospitality and accommodation businesses are said to be the most negatively affected by the national living wage changes.
With the national living wage set to rise to £9.05 by 2020 many are uncertain of what the future for SME’s has in store.