Small and medium-sized businesses in Yorkshire and Humberside will continue to create new jobs in 2016, despite concerns the introduction of the National Living Wage may increase wage bills.
According to research by Yorkshire Bank, nearly one in five SMEs (17 per cent will invest additional funds into hiring new staff in the next 12 months.
More than one in four (28 per cent) Yorkshire and Humberside SMEs will also invest more money into staff training to support their belief that skilled people are the key to innovation, creativity and business growth.
However, nearly two thirds (60 per cent) of small and medium sized businesses believe the introduction of the National Living Wage in 2016 will lead to an increase in staff costs.
Nearly one in three SMEs (28 per cent) expect their salary costs to go up by as much as ten per cent as a result of the National Living Wage introduction.
From April 2016, employers will be required to pay all staff over the age 25 a National Living Wage of £7.20 an hour – a 50p increase on the current national minimum wage of £6.80. By 2020 this will rise to £9 an hour.
Two in every five SMEs in Yorkshire and Humberside (40%) think the National Living Wage will have no impact on their salary costs at all.
Across the UK however, the belief that salary costs will increase is most acutely felt in businesses with between 50 and 100 employees, suggesting larger enterprises (100+ employees) may be able to absorb increased wage bills.
It also suggests the National Living Wage may not have as much of an impact on micro businesses and sole traders, which make up around three quarters of all businesses in the UK.
Simon Wright, regional director for Business and Private Banking at Yorkshire Bank, said: “We know businesses are investing in their most precious assets – their people.
“Having the right people and skills is a big issue for businesses to manage as our economy shifts from one of traditional manufacturing to being knowledge led.
“It’s crucial for all businesses to be equipped with talented, creative and innovative people to drive innovation and growth.
“There are many benefits brought about by raising basic salaries – improved staff retention, increased productivity and staff satisfaction.
“While businesses will need to manage this increase in costs in what is already a competitive, albeit growing, economy, there is support available both in terms of funding and advice.”