Four in ten SMEs 'increasing prices as result of higher wages'

A report published by the Federation of Small Businesses (FSB) has suggested that four in ten small firms are having to increase their prices as a direct result of higher wages.

15 Aug 2019

A report published by the Federation of Small Businesses (FSB) has suggested that four in ten small firms are having to increase their prices as a direct result of higher wages.

According to the FSB, small business owners are having to cut profits and productivity-enhancing investments in order to better absorb 'inflation-beating wage increases'.

An FSB survey of more than 1,000 businesses found that 51% of small firms were paying their employees at least £8.21 per hour prior to this becoming the National Living Wage (NLW) in April.

Many business owners have chosen to pay themselves less in order to accommodate the NLW rise. 71% lowered profits or absorbed costs, whilst 45% increased prices, and 29% delayed investment.

The FSB has urged the Low Pay Commission (LPC) to 'maintain a firm level of independence', and to ensure that the NLW rate isn't 'dictated by arbitrary political targets'.

'Small businesses continue to be ahead of the curve on pay,' said Mike Cherry, National Chairman of the FSB.

'More than half were paying all staff the current NLW before they were obliged to do so – an even greater proportion were doing so in the smallest firms.

'We're now seeing more small business owners than ever saying that living wage increases are impacting the bottom line. Policymakers of all stripes need to recognise that higher minimum wage rates are not a silver bullet. Ending poverty means taking action on various fronts, not simply burdening smaller businesses with more costs.'

Quick Links

Home | Contact us | Accessibility | Disclaimer | Help | Site map |

© 2019 Blue Spire Limited. All rights reserved.

We use cookies on this website, you can find more information about cookies here.

Contact Chichester Office

Tel: +44 (0)1243 781234
Fax: +44 (0)1243 791770
Email: chichester@bluespiregroup.com


Contact Brighton Office

Tel: +44 (0)1273 739533
Fax: +44 (0)1273 732844
Email: brighton@bluespiregroup.com

Chichester Address
Cawley Priory, South Pallant, Chichester, West Sussex PO19 1SY

Brighton Address
5th Floor Intergen House, 65-67 Western Road, Hove, East Sussex BN3 2JQ

Blue Spire Limited is Registered to carry out audit work in the UK and Ireland and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales C004152645. Professional indemnity insurance is provided by Royal & Sun Alliance Insurance Plc 9th Floor, One Plantation Place, 30 Fenchurch Street, London, EC3M 3BD and its territorial coverage is worldwide (excluding United States/Canada).
Blue Spire Financial Planning Limited is authorised and regulated by the Financial Conduct Authority. FSA register https://www.fca.org.uk/register reference 566257. This guidance and/or advice contained within this website is subject to the UK regulatory regime, and is therefore targeted at customers based in the UK