Small Businesses in the UK are Reducing Staff Amid COVID-19 Pandemic

The COVID-19 pandemic has been hard on businesses around the world, including in the UK. While larger companies have also been affected by the economic downturn, small businesses are struggling the most. To mitigate the impacts of the pandemic they have no choice but to lay off some of their employees.

Why do businesses have to fire some of the staff?

The main reasons why businesses have been cutting their staff is inflation that has resulted in business owners having to pay more for running their companies and having to raise their prices. Many have been struggling to pay back debts they have gotten into during lockdowns when they were unable to operate their businesses and had no income coming in for months. Furthermore, many have been unable to pay their utility bills with energy supply becoming very expensive as a result of the ongoing energy market crisis.

According to a survey of 442 firms organised by Moore UK, an accountancy network, ‘Two-fifths (42 per cent) of owner-managed businesses in London are planning to make redundancies this winter,’ City A.M. reported. Many are deciding to let go of their staff because furlough has been removed and they would be getting no assistance in the event of another lockdown.

The chairman of Moore UK said that ‘No smaller business wants to lay off staff if it can be avoided and it seems like many are still waiting to see if they need to press that button. Their cash flow might allow them to keep their full workforces employed for now but they have plans in place to quickly make redundancies if they need to.’

Business owners that took part in the survey also said that the increasing employee costs are one of the main factors making them fire staff.

The new COVID variant is expected to affect businesses even more

As the UK is dealing with a new variant of COVID-19, more resistant to vaccines and spreading faster than other variants, new restrictions and at least partial lockdowns are likely to be introduced. This could lead to businesses having to close their doors for weeks or months and losing a lot of revenue. To survive another lockdown, urgent measures such as firing some of the employees seem necessary. Yet again, the hospitality industry will most likely be hit the hardest by the restrictions.

Employees are getting frustrated at business owners but in the absence of schemes like furlough, letting them go is the only way for small businesses to survive.