Over half (64%) of small businesses are seeing profits dip as a result of the latest national living wage (NLW) rise, according to a study.
The NLW increased from £7.20 to £7.50 per hour on 1 April 2017.
The Federation of Small Businesses (FSB) polled 835 businesses and found 39% have put up prices to cope with the wage increase.
A further 24% have either cancelled or scaled down investments, while 22% reduced working hours or hired fewer staff.
Additionally, 43% had to increase wages in line with the NLW, suggesting that the majority of owners are already paying their workers above the new rate.
Mike Cherry, national chairman at the FSB, said:
“Small businesses owners have demonstrated their resilience in meeting the challenge set by the NLW, with many cutting their margins, or even paying themselves less, to pay their staff more.
“In sectors where margins are tight, small firms are resorting to more drastic measures to cope with the NLW. Therefore it is vital that the NLW is set at a level that the economy can afford, without job losses or harming job creation.”
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