Originally written by Timothy Adler on Small Business
Small business owners have been paying themselves less, increasing prices, holding back investment and reducing staff hours in response to rising pay.
Seven in ten small business owners (71pc) have eaten into profits in order to absorb the National Living Wage being increased to £8.21 per hour in April. Nearly half of small businesses have had to increase prices (45pc), while 29pc have delayed investment and 23pc have reduced hours worked by staff, according to research.
The Federation of Small Businesses has called for politicians to stop putting up the national minimum wage because rising pay undermines SMEs’ ability to invest and grow.
“While politicians are locked in a battle of who can make the boldest promises on pay, they fail to acknowledge that – within many smaller businesses – bigger pay packets often mean less investment, fewer training opportunities and higher prices,” said Mike Cherry, the FSB’s national chairman.
“With pay now outstripping inflation, it’s harder and harder for small business owners to put funds aside for the investment needed to close the UK’s productivity gap.”
He called for the minimum wage to be set independently by the Low Pay Commission, which was set up alongside the

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