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New research by the Federation of Small Businesses (FSB) has reported that rises to the National Living Wage (NLW) are having a significant impact on small businesses in the UK. The NLW applies only to employees over the age of 25, any employees under this age are paid the National Minimum Wage.
In April 2017, the NLW rose 4 per cent from £7.20 to £7.50, a move the government introduced to make workers £500 better off a year. On the other hand, this has had a knock-on effect to business owners, particularly SME’s.
Small business owners are having to review their finances to help deal with rises. The research shows that 64 per cent of those affected are taking lower profits to cover additional costs. A further 24 per cent have cancelled or scaled down investment plans, while 22 per cent have reduced staff hours.
The research showed that the majority of small businesses are already paying their employees above the National Living Wage. However, 43 per cent have had to increase their wages to meet the rise, putting even more financial pressure on businesses trying to grow.
Businesses are putting their growth plans on hold and 19% of those surveyed are recruiting fewer employees. The NLW is projected to rise to £8.75 by 2020 so this will add further pressure to future growth plans for businesses.
Mike Cherry, the FSB’s national chairman says, "It's vital that the NLW is set at a level that the economy can afford, without job losses or harming job creation."
If you are feeling the pressure due to rises in NLW, instant business funding from Quick Capital can help you to manage additional costs whilst growing your business. Our instant business funding allows you to continue with your growth plans with the added benefit of flexible repayments that are tailored directly to your cash flow.
To find out more about a business cash advance, visit our website or give one of our advisors a call on 0800 3777 402.