Demonstrating the importance of small business to the UK’s COVID-19 recovery, a new report from Xero, shows 410,000 small business jobs need to be created by the end of the year to return to the pre-pandemic jobs trajectory.
Using anonymised and aggregated data of hundreds of thousands of customer records as part of the Xero Small Business Insights (XSBI) programme, developed in partnership with Accenture, The Job Ahead report suggested that UK small business job losses have been almost double those in big businesses.
With small businesses employing over half of the UK workforce, a strong sector recovery will be needed to achieve significant employment growth.
But following the collapse of small business jobs down to -24.4% y/y in May 2020, jobs in February 2021 remained 10.6% below February 2020 levels.
The report found that women, employees aged 30 and under, and those in customer-centric jobs (such as hospitality) experienced particularly sharp declines in employment in the small business sector during the early months of the crisis, with growth continuing to lag into 2021.
However, the report also found that digitally connected small businesses faced far fewer declines in jobs (14.8%) than those with less connectivity (18.4%).
Small businesses that paid higher wages in each industry also saw fewer job losses. In May 2020, higher paying companies saw small business jobs down 13.5% compared to lower paying companies with jobs down 22.3%.