SME Employment Growth Predicted to Plateau by 2025

UK SME Job Boom? : Turns Out It’s a Flatline

In a surprise twist that’s got the Treasury a bit on edge, the latest numbers from Employment Hero’s SmartMatch Salary Report paint a bleak picture for small‑business hiring in Britain.

What’s the Scoop?

Data pulled from 90,000 employees in firms of 1‑500 people.
Bottom line: full‑time job growth over the last six months is now a mere 2.6%.
That’s a sharp drop from the 12.8% seen in October 2024.
Grey‑area: the last quarter shows very little change – basically a flat ride.

The “Job Tax” Effect

When the government announced a 1.2% hike in National Insurance Contributions (think of it as a “big‑tax” on every brand‑new hire), many companies decided to hit pause on new recruitment. It’s like when you’re about to buy a new car and suddenly the interest rate goes up – you’ll probably hold off.

What the Numbers Say

Here’s a quick look:

Full‑time growth hit 0.9% in the three‑month period to August.
That’s down from 3.8% in the preceding three months (ending June).
September and October did show a smidge of picking up, hinting that the drying-out might just be leveling, not crashing.

Why the Slowdown?

After the July general election, a lot of employers started to “wait and see” mode. With the political landscape still in a limbo, hiring froze – much like people holding off on buying house when the interest rates are uncertain.

Bottom Line

SMEs are basically holding a marathon hold‑on, having to swerve around a new tax that’s definitely adding a pinch to the cost of each fresh hire. If the Treasury’s Autumn Budget comes with more surprises, many small businesses will likely think twice before reaching for the “Hire Me!” button again.

Employment decline in the North worsens wage gap

North England Employment Hits a Low Note

Over the past year leading up to October, full‑time jobs in the North of England fell by 3.3 %. It looks like hiring in the region is slowing, and the whole market is showing a bit of a downturn.

Why It’s Happening

It seems to stem from a dip in Manufacturing, Transport & Logistics, where full‑time employment dropped another 1.5 % during that period.

What the Numbers Actually Say

South England (minus London): +2.9 % over a year
Greater London: +2 %
Scotland: +1.2 %

These regional differences help explain the stubborn North‑South wage gap – the median full‑time earner in London pulls in about £42,000 a year, roughly £9,000 more than the median North employee, who averages £32,770.

Industry Voice – Kevin Fitzgerald, MD, Employment Hero UK

“These figures should be a wake‑up call to the Government – employment growth is already shrinking at our small and medium firms, and the tax hike on job creators is only going to make things worse.”

“When you look at the data, we’re bracing for a mix of slower hiring and rising costs that will really pressure SMEs through 2025. It’s especially tough in areas like the North, where employment is falling and wages lag behind. We need consistent growth to keep our economy moving; flatlining means more people left jobless as the population keeps ticking up.”

“Large firms can absorb additional costs, but SMEs are working on razor‑thin margins. The National Insurance increase will make many small business owners think twice about creating new roles, exactly at a time when employment growth is natural cooling. The Government talks about supporting small business growth, but this policy does the opposite – it raises hiring costs just when SMEs need every boost they can get.”