10 December 2014
As only 3% of self-employed workers hire staff, the RSA is suggesting a fresh approach to encouraging small business recruitment.
Despite a staggering rise in the number of people working for themselves, very few will grow their business enough to recruit staff. The RSA (Royal Society for the encouragement of Arts, Manufactures and Commerce) is suggesting a fresh approach to the government’s measures to encourage small business recruitment.
There has been a 30% increase in the number of people becoming self-employed since 2000, which means that one in every seven workers is now self-employed. However, while the government has introduced measures to make it easier, only 3% of these small businesses will ever hire staff. According to the RSA, if this percentage was even doubled to 6%, it would create an extra 100,000 jobs. Therefore, it has produced a report called Everyday Employers, suggesting a fresh take on the government’s approach.
The report defines three barriers that look at the behavioural drivers and obstacles for recruitment:
Many small businesses don’t take on staff because of the immediate costs of employing someone, including wages and national insurance and pensions contributions. This plus other obstacles, such as lack of knowledge and experience in managing staff, deter business owners from hiring and expanding. To reduce these barriers, the RSA suggests:
Business owners often think that employing a member of staff is more risky that it actually is. 88% of firms with no workers say the prospect of managing staff is not easy, yet fewer than half of businesses that actually employ staff agree with this. Many business owners may have the confidence to create their own business, but not the right mindset to grow their venture. Here, the RSA is suggesting to
Many business owners base their decisions on intuition rather than simple logic or reason. Often people become risk averse, focusing on what they could lose by taking on an employee rather than thinking about the gains. Many small companies also fear losing control of their business if they expand and take on staff.
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