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Small business jobs grow in October but remain below pre-pandemic levels

Saleha Riaz
·3-min read
Lockdowns have impacted jobs in SMEs. Photo: Getty Images
Lockdowns have impacted jobs in SMEs. Photo: Getty Images

In October, the UK’s small businesses experienced their largest year-on-year decline in revenues since May, and while jobs rose month-on-month, they remained below pre-pandemic levels, new data revealed.

Research by Xero (XROLF), a cloud-based accounting software platform for small businesses, in partnership with research firm AlphaBeta, showed that “despite uncertainty around the furlough scheme and local lockdowns,” jobs grew by 1.3% amongst small businesses in October.

Chart: Xero
Chart: Xero

This result is only the second month of positive jobs growth since the first national lockdown began in March and was also the biggest monthly rise since the onset of the pandemic.

However, jobs still remain 3.4% below pre-crisis levels.

“As the second national lockdown affects millions of workers, it is unlikely we will see sustained job gains in the coming months,” according to Xero.

Scottish small business employment was found to be most heavily impacted (5.6% lower than pre crisis levels), while the east of England was the only region to experience employment growth of 0.4% between the start of the crisis and October.

The report also showed that small business revenues were 11.9% lower in October than 12 months earlier.

This was a deterioration from September where revenues were 5.9% lower year-on-year.

“This drop is most likely due to the introduction of the local tiered restrictions across much of the country, reversing the partial recovery seen previously,” the study said.

“With sales already stunted, there is a possibility revenues could weaken further in November as England spent the month in a nation-wide lockdown,” it added.

Small businesses in Scotland and Wales saw the largest decline in revenue than seen in the previous 12 months (down 15%). The report said this was due to ‘circuit breaker’ lockdowns, a relatively short lockdown, usually with a set end date.

READ MORE: Small business will be 'engine' to UK economic recovery in 2021

The South West saw the smallest impact on revenue, a fall of 5%, followed by the east of England and the south east, which experienced a fall of 8%.

Overall, the weakest sectors were ‘arts & recreation’ and hospitality, both down 36% year-on-year.

Gary Turner, managing director and co-founder of Xero, said: “Despite the current lockdown ending this week, continued restrictions and Brexit uncertainties suggest that the worst is still to come. This will sadly bring with it an even sharper decline for smaller businesses.”

“It’s going to be a long winter, and these resilient firms need our help more than ever before,” he added.

The report also found that small business average payment times improved during October and are now only a third of a day longer than they were in February, before the pandemic began.

Small businesses are now waiting 31.2 days to be paid, a substantial improvement on the 37.4 days in May.

It was reported last month that UK employers are expected to slash 1.5 million jobs by Christmas, as the end of furlough triggers a fresh wave of layoffs despite the government’s new job support scheme.

New analysis suggests 1.2 million furloughed workers are “waiting in vain to return to jobs that no longer exist,” and will face redundancy by the end of the year.

Another 300,000 employees who have either returned to work or were never furloughed are also predicted to lose their jobs by a leading economic consultancy.

WATCH: How the UK government furlough scheme is changing