Rising inflation has impacted 95% of UK SMEs

Posted on 29 Aug, 2022

In a study conducted for NatWest’s Mentor by OnePoll, the extent of current hardships and emerging concerns faced by the UK’s SMEs is all too clear. Small and mid-sized UK enterprises are battling a harsh range of post-pandemic staffing challenges, and face external challenges on multiple fronts, mainly brought to the fore by inflationary pressures.

The poll highlights four key areas of concern:

• The cost of living crisis is biting into budgets: Over half of SMEs have endured above-inflation running costs, as global crises hit commerce, while 95% report higher running costs as a result of increased cost of living.
• Recruitment challenges continue to take a heavy toll: Wage negotiations and interview no-shows are the biggest recruitment challenges for SMEs. Almost a quarter have seen new hires leave shortly after joining.
• Staff attrition is fuelling talent concerns and wage inflation: The so-called ‘Great Resignation’ has cast its shadow over SMEs, with more than a quarter reporting they have been unable to replace lost staff and vacancies remain unfilled as a result. Millennials are confirmed as the age group most likely to have left jobs in SMEs, with 29% reporting this.
• Juggling act continues with hybrid working, wellness and inclusivity vying for visibility: Around a third of decision-makers plan to scrap hybrid working within the coming six months. Diversity, equity and inclusion (DEI) is still not a priority for 28% of SMEs.

The poll also identified regional inflationary hotspots in London, East Anglia, and Yorkshire. In the capital, costs have jumped by up to 30% for a third of respondents. The majority (79%) of East Anglian firms report costs surging above inflation, at a rate of 11-20%, while 64% of businesses in Yorkshire and the Humber say their costs have risen by 6-10%, suggesting SMEs here are slightly less affected by inflation than the national average.

• Recruitment challenges take a heavy toll: The poll found 95% of SMEs have struggled to recruit staff in the last year. The most pressing problems reported were of an inflationary nature: almost one third (29%) of decision makers say that in the past year, wage negotiations have failed to meet candidate expectations. Moreover, almost one in four SMEs (24%) struggle with further inflationary staffing pressures, where benefits packages are failing to meet candidates’ expectations.
• The continuing juggling act of hybrid working: While many firms continue to embrace a split between home and office working, the future is less certain for others. 35% of SMEs feel team dynamics have improved thanks to hybrid working. Even so, according to those polled, the future of hybrid working appears far from secure, with 32% planning to call time on the policy within three to six months according to the poll. However, another 38% have no plans to ditch it.
• Wellbeing inches up SME agendas: The poll gives a mixed view of wellbeing initiatives in SMEs. 31% having no plans in place, whilst others are showing more imagination; 24% are introducing flexible working hours, 23% opt for free or supplemented private healthcare, and 21% are creating wellbeing champions.

Natalie Nelson, Technical Advice Lead of Mentor comments: “Our survey reveals that SMEs have a fight on their hands – not only to stay afloat as costs continue to rise, but also to keep hold of staff, adapt to society’s new work-life expectations, and to recruit new team members. Mentor has a suite of expert help and advice on hand to help business owners and managers navigate the everyday and unexpected HR challenges alike

Source: Hrnews.co.uk