15% of SMEs plan to introduce pay cuts

15% of SME's plan to introduce pay cuts in the coming months

One in six (15%) small and medium-sized enterprises (SMEs) are planning to make pay cuts according to research by Vestd.

Its study of 500 UK-based business leaders, owners, partners, and C-suite executives also found that a further 17% were undecided, while 48% said there would be no pay rises in the next 12 months.

Additional findings revealed that almost a quarter (24%) of SME’s would not choose to introduce an equity share scheme as they think it would be too complicated, while 21% have other priorities. A further 30% decided to not opt-in for this benefit due to perceptions of cost.

Ifty Nasir, co-founder at Vestd, said “Some employers are in a very difficult position, they either cut their staff numbers and struggle to remain productive, or they have to cut pay, which risks losing the best employees. Pay cuts for this many people is unprecedented and, without their agreement, is illegal. It would seriously deplete spending power and that could trigger an even deeper recession.

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“Our research shows that the more progressive organisations are turning to sharing equity, as it can be used to offset short term pay issues. In the long run it could be worth many times more than any gap in salary growth.

“Incentivising and rewarding people with equity has proven business benefits and is becoming the norm among progressive start-ups and SMEs.”