Youth unemployment could be stamped out if small and medium businesses each hired a member of staff. But the MD of Intuit tells Channel 4 News that paperwork and process holds them back.
Britain's jobs crisis shows no signs of letting up. UK unemployment now stands at 2.67 million – and that includes more than one million 16 to 24 year olds. If this problem isn’t tackled head-on, we’re in real danger of creating a lost generation, writes Pernille Bruun-Jensen, MD of Intuit.
The recent announcements of new job opportunities from global firms such as GlaxoSmithKline, Tesco and Jaguar Land Rover are encouraging. The government has also just launched a £1bn Youth Contract Scheme to help lift young people out of unemployment and into work, which we applaud.
Britain’s SMEs also have a powerful role to play. If even a quarter of the UK’s 4.5 million sole traders and small businesses took on just one other employee, we could, in theory, stamp out youth unemployment in this country.
It sounds like a simple solution. But for many small firms, taking on an extra member of staff can appear to be a giant leap of faith.
Intuit recently polled 500 UK sole traders and small businesses to gauge their attitude to recruitment. The results were published in a report, One Giant Leap: The Vital Step to Becoming An Employer, which revealed that 91 per cent of sole traders would not consider hiring an employee in the next 12 months.
Interestingly, their reluctance wasn’t down to economic conditions. Nor is it a lack of ambition; half of all businesses we spoke to saw employment as a route to growth. The problem boils down to processes and procedures rather than economic pain: more than a quarter of respondents placed the blame on the administrative burden of bureaucracy and paperwork.
Read more: How can employers be persuaded to hire?
So, what will it take to change business owners’ minds?
We believe there are four fundamental ways to encourage more small companies to expand their workforce:
1. Mentoring schemes for sole traders. Britain’s one-man bands could potentially be encouraged to hire their first employee through greater exposure to entrepreneurs who have already been through the process.
2. Help with administrative tasks, such as creating employment documents, health and safety compliance and setting up payroll infrastructure. Despite the advice of HMRC to use an electronic payroll system, many small businesses still use basic spreadsheets or, worse, pen-and-paper to run their staff payroll.
3. Lowering employment-related taxes such as National Insurance Contributions. Nearly 50 per cent of the pollsters in our survey said this move would encourage them to hire someone in the next few months.
4. Apprenticeship schemes targeted at sole traders. Taking on an apprentice could be a simple way of avoiding the risks and bureaucracy associated with becoming a permanent employer. The number of apprenticeship starts are on course to reach half a million this year, according to figures released this week.
Skills minister John Hayes – who has been spearheading the government’s push on apprenticeships – says they are at the heart of the coalition’s skills policy and this is a great example of the good work being done to make it easier for small business owners to employ staff. More targeted information on apprenticeship schemes and special incentives for sole traders would encourage more to take the plunge.
As a nation, we desperately need small businesses – the engine drivers of our economy – to create new jobs as they grow. There is no shortage of talent and ambition out there. If we can harness that potential across Britain’s 4.5 million small firms, then we’ll be one step closer to economic recovery.