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SME redundancy warning as survey suggests nearly 1.5m jobs could go

Written by  Jul 15, 2020

Almost two-thirds of small businesses are likely to make redundancies as a result of the coronavirus crisis, putting 1.4m jobs at risk, a new report says.

The research by Newcastle technology giant Sage has found that 15% of small businesses do not think they could survive a second spike in the disease, while around half are confident they could survive a 20% drop in income between now and September.

Sage’s research suggests that managerial roles are most at risk, with the company saying last week’s statement from Chancellor Rishi Sunak was a “missed opportunity” to incentivise businesses to adopt more technology as part of their recovery.

The survey found that around 75% of SMEs expect to be profitable by this time next year, and an even larger number, 80%, think digital adoption will be crucial to economic recovery and job creation.

But only 33% have the ability to invest in technology, and only 54% of businesses are prepared for risks such as a cyber attack, Brexit, climate change or cash flow problems.

Sage has called on the Government to help small businesses invest in technology with digital vouchers, grants or tax breaks.

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Sabby Gill, managing director of Sage UK and Ireland, said: “In the words of one of our customers, the insights in this report are a ‘gut wrenching’ read.

“Behind the stark statistics lie thousands of individual stories of people whose livelihoods and passions are under threat. Businesses have had to radically change their plans and strategies, adapting to unprecedented ways of working. But this has created the potential to drive up productivity, especially where processes have been digitised.

“We have some tough months ahead with many unknowns so if we can help businesses access finance and technology and reduce exposure to risk, we will see new jobs emerging.

“The measures announced by the Chancellor are encouraging but we need to go further. Sage, on behalf of the country’s SMEs, is calling on the Government to act now and take a three pronged approach to aid digital adoption, help to boost exports and provide tailored support that encourages entrepreneurialism by equipping the unemployed with essential business skills.”

The fears of the impact from a second wave of coronavirus have been raised after a report from the Academy of Medical Sciences warned that a resurgence of the disease was possible and could be more serious than the first.

Meanwhile, the Office for Budget Responsibility has said that the “UK is on track to record the largest decline in annual GDP for 300 years”, warning that the economy could shrink by as much as 14.3% in 2020.

Commenting on the Sage report, Tony Danker, chief executive of Be the Business and the next director-general of the CBI, said: “For me, the most important takeaway from this report is that while UK SMEs are optimistic for the future, this is a precarious recovery.

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“Most say they will be making a profit by the end of the year. However, there is a caveat to this optimistic outlook, and this is where I believe policy makers and business support networks must focus their attention.

“SMEs are not well prepared for a second wave of the pandemic or any other significant external shock. I believe the answer to the question of how we should protect this fragile recovery is found within those SMEs that are thinking about tech adoption but have not yet acted.”


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Peter Flynn

Senior Editor and self confessed techie, bringing a variety of topical business tech news, help and advice in the UK. I have worked in various fields throughout my career such as a Systems Administrator, Security Consultant and other technical related roles, these days I concentrate on IT journalism and technical writing.

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