Data has revealed that employees in Yorkshire are getting less pay in return for the value they add to the economy.
This is in line with national trends over the last two decades, but the change in Yorkshire’s productivity/wage ratio between 2004 and 2021 is the worst in the UK.
Economic expert Professor Mark Rhodes, from Leeds Beckett, said that the figures show that Yorkshire employees have “lost out” compared to the rest of the country.
“There’s been a growth in productivity that has been passed back to employees within industry at a lower rate. So they’ve lost out to a greater extent than other employees have.”
Despite this, the data doesn’t take into account state benefits, employer pension contributions, or any other costs that businesses incur.
“What that masks is other contributions that employees have to make. A big cost with lots of employers are pensions – and those pension costs have gone up.”
A nest report in 2023 found that only 25% of small (2-49 employees) businesses were contributing more than the minimum employer contribution of 3% to all of their employees.
Medium businesses (50-249 employees) were slightly more likely to contribute more than the minimum for all their employees, at 38%.
SMEs (Small/Medium Enterprises) make up 60% of total employment in the UK, and the rise in employers National Insurance contributions in last year’s budget has eaten away at their bottom line – with no added direct benefit to their employees.
Profitability is 2.1% down from it’s 20-year high in 2014.
Daneile Moore from Ad-Venture, backed by West Yorkshire Combined Authority and dedicated to supporting young businesses in Yorkshire, said that SME’s have been hit by a range of challenges over the last decade, leaving businesses frustrated.
Moore says that interest rates, gas and electricity costs, the cost of living crisis and rises in employer national insurance contributions have all played a role in creating a difficult business landscape.
“SMEs right now, in reality, are facing considerable challenges.”
“We have got issues around growth and productivity in the UK – we’re lagging behind in terms of forecast growth. And there’s been difficult decisions that Governments have had to make around that.”
Moore says Traditional SMEs with a headcount of 10-25 have struggled with interest rate rises, so accessing finance has been a challenge. This has created a barrier for growth for these small businesses, because they’ve been unable to invest in expansion.
This was made worse by the rise in National Insurance contributions in last year’s budget, which businesses said would stifle growth.