As small firms look to shed more staff, Government must be bolder to help incentivise job creation

New figures from the Federation of Small Businesses (FSB) shows that small businesses will look to shed staff in the first three months of 2012, as it warns that the Government needs to be bolder in its changes to existing employment law to incentivise employment.

Ahead of employment statistics published tomorrow (Wednesday 18 January), figures from the FSB ‘Voice of Small Business’ Index show that a net balance of 6.5 per cent small firms plan to lay off workers in the first three months of 2012 – the highest level since the survey began.

The ‘Voice of Small Business’ Index also shows that a balance of 4.8 per cent of small businesses reduced their headcount in the three months from October to December – slightly less than businesses had expected.

With heavy cuts in the public sector and a steep rise in the number of people unemployed, more job losses by small businesses would make for an extremely difficult labour market.

With unemployment statistics expected to rise again tomorrow, the FSB is urging the Government to ‘think small first’ when it responds to the Modern Workplaces consultation. The FSB is specifically calling for:

· Micro firms to be made exempt from the extension of the right to request flexible working for all

· A complete and simplified reform of maternity and paternity leave in the future – doing so in an uncertain economic environment could harm businesses

· A micro business exemption from proposals on pay audits which will require employers who lose an Employment Tribunal case to carry out a potentially costly, time consuming and complex pay audit

Small business confidence plummeted at the end of 2012 as businesses were hit by high inflation, rising utility bills and reduced spending. So the FSB is calling on the Government to act on policies and initiatives already announced to help boost small business confidence so that they can invest and grow and turn this into good news in 2012.

John Walker, National Chairman, Federation of Small Businesses, said:

“The beginning of 2012 is beginning to look bleak with confidence incredibly low and businesses looking to shed staff. However, things do not need to be so negative. If the Government makes the right choices and puts action into words we can turn this around. The Government has a good chance to make a real difference to the livelihoods of small firms when it reports on the Modern Workplaces consultation. Tinkering and increasing existing employment laws will only serve to worsen this situation. But by putting simple measures in place, such as excluding micro firms from the right to request flexible working for all, will help free businesses from the shackle of red tape so they can grow, innovate and take on new staff.”