According to the quarterly Viking Small Business Barometer, 62 per cent of small business owners and managing directors believe the economy is still too sluggish and are looking to hold onto as much capital as possible. But with the average annual salary set at £27,000 in the UK and the current rate of inflation at 1.9 per cent, individuals employed by SMEs could face losing £500 by the end of the year.
Despite 46 per cent acknowledging that business has improved over the last three months, and 64 per cent anticipating growth in the next three months, 50 per cent remain adamant that the reports are not reflective of the real situation in their region or sector.
Sophie Christopher at Viking said: “Although we’re seeing signs of economic recovery, SME owners still remain level headed with their approach, opting to tread cautiously rather than be too eager. While they’re reluctant to issue pay rises, small business owners recognise that living costs are rising and welcome an increase in minimum wage.
“Managing Directors are starting to become more optimistic about their future and with many seeing growth in the pipeline, hopefully the current positive reports about the economy will become a true reflection of the state of their business.”
Other findings from the latest instalment of the Viking Small Business Barometer revealed that 89 per cent of respondents predict that they will not see a higher turnover of staff this year as the country moves away from recession. When asked whether they feel the need to provide other incentives where pay rises are not a feasible option, 26 per cent said they provide flexible working as an alternative. Just 17 per cent of small businesses are planning to recruit for new positions this year.
Last quarter’s research revealed that 42 per cent of small businesses said that zero-hours contracts were unfair, despite the fact that 30 per cent admitted to using them on their staff, while two thirds (60 per cent) also anticipated growth in 2014.
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