The Post-Budget Hiring Landscape: The Reality for SMEs

It’s been a few months since the Budget landed, and while the initial shock has worn off, the ripple effects are still being felt – particularly by SMEs. Conversations with businesses in Cheshire and South Manchester have been noticeably different in recent weeks. Uncertainty, caution, and cost-cutting are the themes, and recruiting? Well, for many, it’s not even on the table right now. We’ve had a look into how post-budget hiring has affected SMEs.

 

The Immediate Aftermath: Hiring Freezes and Redundancies

The announcement of the National Minimum Wage increases alongside a £25 billion hike in employer National Insurance contributions – bumping the rate up to 15% and lowering the earnings threshold to £5,000 – has sent shockwaves through the business community. This isn’t just a minor adjustment; it’s a significant increase in operational costs.

Consequently, a survey by the Chartered Institute of Personnel and Development (CIPD) has revealed that over a third of employers are considering staff reductions or halting new hires as a direct consequence of the budget. Meanwhile, the Recruitment & Employment Confederation (REC) reported that permanent vacancies have declined at the steepest rate since August 2020, with both permanent and temporary job placements decreasing. It’s a stark reflection of the current sentiment in the business world.

What we’re seeing locally:

Recruitment Freezes: Many companies have slammed the brakes on recruitment. With tighter budgets, bringing new team members on board has become a luxury some can’t afford.

Redundancies: Unfortunately, some businesses have had to make the tough call to let staff go. The increased financial burden means streamlining operations to stay afloat.

Offshoring: This one is coming up more frequently at the minute. The cost of hiring in the UK is pushing businesses to consider looking beyond UK shores.

 

Why Are We Here?

The increase in employer National Insurance contributions was never going to go unnoticed. That alongside the increase in National Minimum Wage is a significant extra cost for businesses, especially those that don’t have the deep pockets of larger corporations. It’s one thing to plan for growth, but when you suddenly have to pay more just to keep your current team, it forces some tough decisions.

 

But It’s Not All Doom and Gloom

One thing that has stood out to me, despite all of this, is the resilience of SMEs. While employer confidence has taken a hit, the drop isn’t as dramatic as many feared, according to REC data. Businesses are adapting, finding new ways to work, and making smart, strategic decisions to get through this period. Some are focusing on upskilling their current teams, others are rethinking their hiring strategies for when things stabilise.

The reality is, we’ve been here before. The hiring market goes through cycles, and while this one might feel like a slog, it won’t last forever. So, if you’re an SME feeling the strain, you’re not alone, things are tough right now, but they will absolutely turn around.