RISING operational costs, talent retention and cyber threats continue to dominate boardroom discussion. However, the biggest concern for small and medium-sized enterprises this year is the increase in National Insurance contributions.
It is a change that may have far-reaching financial and operational consequences, according to research by Northampton-based insurance company Towergate Insurance.
In its nationwide survey, aimed at identifying the key challenges facing SMEs:
54% of respondents cited the rise in National Insurance contributions as their primary concern.
25% highlighted the increasing threat of cyber attacks and the need for stronger cyber security infrastructure.
20% pointed to ongoing difficulties in recruitment and retention, particularly in attracting skilled talent.
1% mentioned broader economic pressures, including inflation and supply chain disruption.
The NI contributions increase on employers is placing intense pressure on businesses, Towergate said. Higher contributions are raising payroll costs, forcing SMEs to reconsider hiring plans, salary reviews and the security of existing roles. Employees may experience fewer pay rises, limited benefits and slower recruitment cycles. For SMEs competing with larger firms for talent, this shift could widen the gap in employer attractiveness.
The recruitment challenges, highlighted by one in five survey participants, confirm the urgency of building resilient, appealing workplaces despite cost constraints, the survey concluded. Combined with the rising threat of cyber crime, SMEs face a “perfect storm” of external and internal pressures.
“We understand the challenges that businesses of all shapes and sizes are facing, which were confirmed by responders in this survey,” said Towergate Insurance’s chief executive Richard Tuplin. “Unexpected increased costs such as we saw with NI can create temptation to cut costs elsewhere and take risks you otherwise would not.
“As SMEs continue to grapple with these financial challenges, exploring solutions like salary sacrifice schemes and seeking professional advice can help businesses mitigate costs while still supporting their employees.”
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