One in five employees in small businesses are “under-utilised”, according to the Business Department’s English Business Survey, with experts warning that some struggling companies are inefficiently holding on to workers they do not require, reports The Telegraph.
Emmanouil Schizas, senior economic analyst at the Association of Chartered Certified Accountants, said many unnecessary staff were “kept in employment by business owners’ (sometimes heroic and sometimes misguided) refusal to give up”.
“A sudden deterioration in economic conditions would threaten these jobs, and, because the associated businesses would go under, a recovery may or may not restore them.”
About one in 10 of the UK’s entire private sector workforce – 2.3m people – are in “precarious employment”, the research suggests.
Mr Schizas added: “Smaller businesses have more ‘spare’ headcount than larger ones. A lot of micro enterprises may be under-utilising staff because they themselves are barely getting by. [More than] 20pc of SME owners have had to inject money into their business to keep them from folding.”
He added that small businesses may also be more likely to hold on to under-utilised workers because the “combination of a lack of specialisation, family ownership and small absolute numbers means that it is harder for small businesses to lose staff”.
Separate research found that nearly half of all Britain’s small and medium-sized businesses (SMEs) are concerned about managing their cash flow over the next year.
The survey of 451 companies by Santander found that 46pc of these companies had recently suffered at least one serious disruption to their cash flow, typically because of customers who were late with bills or were unable to pay them.