15% of UK SMEs are planning to introduce some form of pay cuts


15% of UK SMEs are planning to make some form of employee pay cuts this year according to research by Vestd.


Its study of 500 UK-based business leaders, owners, partners, and C-suite executives also found that a further 17% were still undecided so the total of 15% could likely rise as small and medium business adapt to the new normal. A further 48% of UK SMEs questioned said there would likely be no pay rises in the next 12 months.


Additional findings from the nationwide survey highlighted that almost a quarter (24%) of SME’s were against introducing any form of equity share scheme as it was seen as too complicated.


Ifty Nasir, co-founder at Vestd, said “Some employers are in a very difficult position, they either cut their staff numbers and struggle to remain productive, or they have to cut pay, which risks losing the best employees. Pay cuts for this many people is unprecedented and, without their agreement, is illegal. It would seriously deplete spending power and that could trigger an even deeper recession.

“Our research shows that the more progressive organisations are turning to sharing equity, as it can be used to offset short term pay issues. In the long run it could be worth many times more than any gap in salary growth.

“Incentivising and rewarding people with equity has proven business benefits and is becoming the norm among progressive start-ups and SMEs.”

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