Pace of job losses in small businesses slows

The pace of job losses in small businesses has slowed - but the forecast for job creation remains weak.

The Small Firms Association says six out of 10 members believe employee numbers will remain the same over the next three months.

However, almost a quarter will cut their workforce.

Director Avine McNally said that while there is some positive news in the survey, we can't afford to become complacent.

“The overall survey results show that the pace of job losses within small businesses has slowed however, the forecast for job creation remains weak," she said.

The survey was conducted during September and a total of 636 companies employing 13,750 people responded. The sample was drawn from manufacturing, distribution, retail and services sectors and from a regionally representative sample.

Some 60% of companies indicated that employee numbers will remain at current levels during the next three months, while 24% of companies expect a decrease in employee numbers in the same period, down from 37% this time last year.

Meanwhile 14% of respondents expect to increase employee numbers in the next three months an increase of 5% on the last quarter.

“The survey shows that the rate of job losses and reduction in employee hours has slowed," McNally said.

"This is a reflection of the series of actions which have been taken by many small firms to try and reduce costs and retain jobs, however, we cannot become complacent, many jobs are still at risk.”

Some 41% of small firms will implement a recruitment freeze in the next three months and 24% of firms will not extend any current employment contracts; this figure remains unchanged since the end of 2009.

Compulsory redundancies will be introduced by 4% of companies.

"These figures are worrying as it shows the outlook for job creation remains weak," added McNally.

"The reluctance to recruit is based on a number of issues, mainly economic and financial uncertainty."

Looking ahead to 2011, the figures would appear to be more optimistic with three out of five companies (62%) expecting employee numbers to stay at their current level and 19% of firms expecting to increase their employee numbers.

In regards to pay over half of respondents (52%) expect their total pay bill to remain at its current level in 2011, while 23% of small firms expect their pay bill to decrease.

“Our ability to create jobs has been severely damaged by a loss to competitiveness and the lack of jobs is one of the biggest issues facing the economy," McNally concluded.

"The key priority is to keep companies in business, improve competitiveness, generate confidence in the economy and create the enterprise environment where job losses can be stabilised and jobs can be preserved and created."