UK Would Need 410,000 Jobs in Small Businesses to Aid Recovery

Summary

• A study found that the UK would need 410,000 jobs in small businesses in order to return to the pre-Covid growth path.
• In the UK, job losses in small business seem to have been almost double of the job losses seen in big businesses.

In the UK, job losses in small business seem to be almost double of the job losses seen in big businesses. The UK would need 410,000 jobs in small businesses in order to return to the pre-Covid growth path, a study by Xero has found. The US would need 2 million such jobs, Australia 210,000, and Canada would need 220,000.

The report said that for recovery in jobs to pick up, small businesses must play an important role. Without jobs picking up in small businesses, it would be difficult to see employment rebound across the economy. The report also said that in order to achieve this, there needs to be significant policy support by the government, and there should be programmes and schemes that could aid in their recovery.

The study also found that digitisation of small businesses is important for the road to recovery. An analysis done by Xero of its customers revealed that those with digitised operations perform better during the crisis and picks up faster when recovery is underway. The report said that small businesses need to be made more resilient through their recovery process, which is in keeping with the UK government’s focus on digitising small businesses as well as OECD guidelines.

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Some nations would take a long time for jobs in small firms to be back to the 2019 level, the study observed. Countries where economic recovery is underway, are those where the government provided continuous financial support throughout the pandemic. In countries where jobs in small operations are yet to return to pre-Covid levels would likely need to continue with financial assistance.

The report also observed that growth in wages is still to reach pre-pandemic levels, even in nations that have begun to rebuild jobs. As policies concentrate on revive economic growth by boosting demand, the low wage environment needs to be addressed. Many countries have still trade restrictions on their small businesses and underemployment, and unemployment rates are still mostly higher than pre-pandemic levels in various countries. In such a situation, it would not be advisable to rely on wage growth alone to provide the necessary demand boost to small businesses in order to add sufficient jobs.

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The study also discovered that the job loss was not spread evenly across the population. Casual employees, women, younger people, and those in sectors like hospitality and tourism and arts and recreation were impacted more. It said that these people would need the most assistance from job re-creation programmes during recovery.