Fewer small firms looking to hire, FSB finds

21 Feb 2025

Research carried out by the Federation of Small Businesses (FSB) has found that fewer small firms are looking to hire as a result of rising labour costs and the upcoming Employment Rights Bill.

The data revealed that 33% of small employers are expecting to reduce staff numbers, whilst only 10% of firms are seeking to hire. 51% of small businesses stated that labour costs are one of the greatest barriers to growing their business.

In regard to the Employment Rights Bill, 67% of firms polled said the changes will make them alter their hiring plans, and an additional 32% will reduce the number of employees they have before the measures take effect.

Commenting on the issue, Tina McKenzie, Policy Chair at the FSB, said: 'Ministers should recognise the risk to jobs and resist any approach that comes across as out of touch with business reality, instead of brushing off their concerns.

'If taking on staff becomes a legal minefield, businesses will simply stop. That means more people on benefits, a ballooning welfare bill and a devastating hit to living standards. Those who will be shut out of work because of this Bill deserve better from the government.'