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Wednesday, 25 March 2015 09:50

The New National Minimum Wage Heaps More Misery On Cash Strapped SMEs.

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There are 5 million SMEs working all hours, employing half of the nation’s workforce, contributing a third of GDP and struggling to create jobs.

Business rates, parental leave, late payments all add to the burden and every year there’s a hike in the NMW: good news (if an increase of 20 pence an hour can be called ‘good news’) for employees but an annual headache for business owners – many of whom don’t bank anything like a national minimum wage themselves at the end of the month. 

I’ve always been and continue to be in favour of a national minimum wage. I’ve seen what unscrupulous employers do when there’s no figure set. I’d like the NMW to be higher. I can’t see why government pays out millions of pounds each year to top up wages with ‘credits’ when a higher NMW would allow people to pay their own way through their own hard work. I’d love to see the adoption of the Living Wage.

I can hear your squeals. You’re thinking ‘she’s never employed anyone in her life’. And you’re right. I’ve been freelance, self-employed for 25 years. I’ve worked with other freelances like me to supply professional services to my clients. I’ve engaged the services of the best people I know in their business to work with me to fulfil contracts. But I’ve never directly ‘employed’ anyone. I am one of millions of small business people – at the micro end of the SME scale, who needs to employ people in order to grow (or just to preserve my own sanity) but who doesn’t because of everything listed above but also because I can’t afford to pay the NMW.

Despite the positive employment figures wages are still struggling to rise far and fast enough to cement a stable and sustainable recovery. We need to do our bit by creating jobs. But the NMW has stopped many of us. Did today’s budget change that? The abolition of Class 2 National Insurance Contributions and NICs if you’re employing under 21 year olds are aimed at boosting employment. The higher personal tax allowance, extension of Small Business Tax Relief, a review of the hated business rates system, and freezing fuel duty again all help but will they persuade me I can afford to pay someone the NMW? I’ll tell you once I’ve done all the sums. But financial considerations and the demise of the dreaded tax return aside, what we really need is to be higher up the government’s agenda. We need a louder, stronger, persistent and more convincing voice in the ear of government. 

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