Spring Forecast: what SMEs really need now
Jobs for young people depend on confidence not just policy
Like most people running a business, I have been thinking about the Spring Forecast. There will be plenty of headlines about tax and spending but what matters more to me is what is happening on the ground in small and mid-sized firms.
One issue stands out for me. Youth unemployment is rising and confidence among young people is more fragile than it has been for a long time. We hear so many stories of companies cutting jobs, the availability of openings for good young people deteriorating and joining the ever-increasing band of young people not in education, employment or training (NEETs). That should concern all of us.
So, what would I like to see in the Spring Forecast? A proper understanding of what it is really like to run an SME, especially when additional costs are being added to employment. The vast majority of SME owners value their people and they do look after them. The government needs to recognise that and respond accordingly. The choices are stark – particularly for young people. It is a case of having a job, with the self-esteem and social development that come with it, or having no job at all. The government needs to trust entrepreneurs and give them the economic room to take a chance on someone without carrying disproportionate risk from day one.
Taking on someone with little or no experience has always carried risk. That risk grows when the cost of employment rises and the penalties for getting it wrong are greater. This results in a lot of owners becoming unwilling to recruit because they are wary of the financial exposure if things do not work out.
Relief from the recent increases in employer National Insurance would be a good place to start in next week’s Statement. A careful review of minimum wage policy, especially for younger workers, would also help. So too would a fresh look at the new employment law changes – from a business owner’s perspective, they are unwelcome and unlikely to serve the very people they are meant to help, whether potential recruits or existing staff.
I would be cautious about expanding public sector schemes that focus on coaching young people for interviews. If the volume of vacancies falls, polishing interview skills will not solve the problem. The main issue is the number of roles available, not how well someone performs in front of a panel.
My message is simple: treat the root cause of the problem and trust the owners and managers of SME businesses. Remove the penalising additional costs and you will see more jobs created and a stronger tax take in time. Stay where we are and unemployment will continue to rise.
Let’s see what happens next week!
David Turner
MD Tinderbox and Director of The Growth Experts
