Resilience, Recovery, and Recruitment: SME optimism will result in millions of new jobs in 2021

  Posted by: electime      20th May 2021

With vaccine rollouts underway, hopes of an end to national lockdowns, and investments made in technologies during the pandemic, 78 per cent of SMEs expect their business to be profitable by 2022.

• As we emerge from lockdown, three-quarters (74 per cent) of SMEs across UK, US and France feel optimistic about their business a year from now and 52 per cent feel the pandemic has made their business more resilient
• When thinking about future profits for SMEs, Sage’s survey suggests that businesses expect to return to pre-pandemic profitability by Q4 2021 thanks to an increase in consumer confidence and greater efficiencies
• Optimism will translate into new jobs across the globe, with 1.2 million more jobs forecasted in the UK, 2.4 million in France and 4.6 million in the US

As major economies reopen across the globe and consumer confidence rises, Sage, the market leader in cloud business management solutions, has unveiled the true levels of resilience and optimism amongst SMEs across the UK, US and France. Sage’s recent sentiment survey shows that SMEs – the economic backbone of many countries – have reached a turning point and confidence has largely returned.

Three quarters of SMEs surveyed are optimistic about the future of their business and growth trajectory in the next year. Optimism is mainly driven by the vaccine rollout programme (45 per cent), being able to see customers in person again (35 per cent), and projections of increased consumer spending (32 per cent). Over eight in 10 SMEs do not expect another lockdown with most SMEs feeling optimistic that their business will return to pre-pandemic levels this summer – both in terms of profitability and staffing levels. In fact, 81 per cent of SMEs across markets think their business will be totally back to normal profitability this summer. This confidence is led by the US (82 per cent ), followed closely by the UK (79 per cent).

An ability to adapt was critical during the pandemic. Many (60 per cent) SMEs say that they have coped well with the barriers COVID-19 placed on them, making big changes to how their business operates. Most commonly, in the UK, 35 per cent of SMEs said they cut overhead costs and, because of further financial barriers, 25 per cent said they relied on their savings to make it through. This behaviour was also reflected in the US, with 38 per cent cutting overhead costs and 27 per cent relying on savings. In France the figure was 35 per cent and 21 per cent respectively.

SMEs turned to technology to overcome difficulties and create efficiencies within the business. In fact, 76 per cent of SMEs say they now rely on technology. In the UK, 52 per cent used new technology to sell more and stay connected with customers or improve how their business operates. In France, 67 per cent used technology in this way while 64 per cent of SMEs in the US also invested in new technologies, nearly all of whom said this increased investment improved their business.

Renewed optimism is driving hiring plans, and as SMEs grow their workforce, they will continue to look at how they can increase diversity and prioritise employee wellbeing. One-third of SMEs are expected to hire in 2021, which could create millions of jobs. When applied to ONS data on employment from SMEs, this could mean 1.2 million more jobs in the UK, in France 2.4 million jobs and 4.6 million in the US.

Since the start of the COVID-19 pandemic, SMEs have been thinking more about their wider role in society, ranging from employee wellbeing initiatives, to being more environmentally sustainable, and becoming a more diverse employer – with many SMEs expected to make further improvements in the upcoming year. In the UK, there will be a bigger focus on ways of working and employee wellness with 37 per cent looking to increase physical wellness, and in the US, 47 per cent of SMEs will look at improving flexible working. In France, we are seeing a drive for change in recruitment to prioritise diversity (34 per cent).

Steve Hare, CEO of Sage Group commented: “As the economic environment improves, optimism amongst our customers is increasing and as is their confidence to capitalise on the opportunities ahead. SMEs are accelerating investment in people and digital technology, prioritising flexibility, resilience, and productivity. This is a clear sign they will bring the bounce back into the economy, and why they need to be at the heart of any recovery plans.

We must make sure this swell of optimism is given the opportunity to become a tidal wave of growth. At Sage, we have called on governments for support and investment to accelerate the recovery of SMEs during these difficult times and made our own investments in supporting an SME led recovery.

We will make it our priority to continue listening, give unheard SMEs a voice with governments and use our time and expertise so that the economic recovery is an inclusive one.”

These findings follow The Survival, Resilience and Growth report undertaken by Sage during summer 2020, which highlighted the need to enable businesses to invest to support recovery, through helping them access technology and finance.