The work of apprentices has directly resulted in more than £550m in cost-saving or revenue-generating activities for employers, according to research by tech startup Multiverse.

The report explores the benefits that apprenticeship schemes bring to the trainee. Multiverse has found that apprentices are 9% more likely to enter a full-time role after their course has finished, compared to university graduates.

The Multiverse report builds a compelling case for the hiring of apprentices. But, research comes after Vodafone Business found that 51% of businesses are cutting plans for apprentices, due to the rising cost of living impacting their budgets.

Despite the challenging economic environment, Multiverse is encouraging business owners and young people to see the mutual benefits that apprenticeships can bring.

Improved finances and greater talent retention for employer

Apprentice providers offer hands-on experience, a salary, and training to trainees. Some firms hesitate to employ a worker who may take longer to learn the tricks of the trade than fully-qualified colleagues.

Research conducted by Vodafone Business recently uncovered that, of the 60% of firms who have taken on apprentices in the past, just over half had axed their schemes because of soaring business costs, including energy and transport.

The research by Multiverse tells a different story, however. Rather than a one-sided investment by the employer, taking on apprentices can in fact be a cost-efficient business strategy.

Multiverse is a tech startup that uses smart algorithms to match businesses with apprentices. The firm ranked various metrics of success to arrive at the figure of £550m as the overall contribution that apprenticeship schemes add to UK small business.

Staff turnover was found to be dramatically reduced by the use of apprenticeships. The data shows that 93% of trainees remain at the same company once they become qualified, saving firms thousands in avoiding hiring and onboarding fees.

Multiverse apprentices also report a 50% decrease in time spent unproductively. These time-savings are equal to nearly six working weeks over one year.

Digital skills shortages are threatening the recruitment plans of UK startups, as employers struggle to find job-ready talent.

Multiverse says it works directly with business leaders to provide tailored apprenticeship programs that service a business’ unique needs. It argues that shrinking this gap will prevent an average of 8.5% of annual revenue from being lost as a result of poor data literacy.

Fewer companies asking for undergraduate degrees

Organisations appear to be catching up to the opportunities of training and upskilling an apprentice, versus hiring university graduates.

For decades, social stigma towards people who choose to enter the workforce upon leaving school, rather than gain a higher education qualification, has had an unfair influence on recruitment decisions.

A 2017 Harvard Business School study found that between 2007 and 2010, job postings listing a bachelor’s degree requirement as a condition of employment rose by 10%.

Now, the tides are shifting. Last year, the number of companies setting a 2:1 level degree as a minimum qualification in job adverts dropped below 50% for the first time, according to the Institute of Student Employers (ISE).

Younger Gen Zers – aged 16-18 – also seem awake to the change. In 2022, Multiverse received one apprentice application every 11 minutes. It says this is more applications than Oxford and Cambridge universities combined.

Euan Blair, CEO of Multiverse, describes the statistic as “proof that apprenticeships are no longer ignored; they’re highly desirable and in-demand.

“Apprenticeships are going from strength to strength as a truly outstanding alternative to university, with apprentices providing immense value to businesses.”

Of course, apprenticeships are a long-term investment. This might not be too attractive for today’s employers, many of whom have implemented a hiring freeze as a way to survive the poor economy.

Handily, government support initiatives take on a large chunk of the financial burden. Employers providing formal study for an apprentice can use the Apprenticeship Levy to apply for funding that will cover any expenses – another incentive for SME owners.

Apprenticeship certificates are more valuable than a university degree

For the apprentice, individuals stand to profit as much as employers. The analysis also found that the average Multiverse apprentice now earns between £26,000 and £30,000 a year.

That’s compared to £25,000 a year for the typical undergraduate, confirming that apprenticeship schemes can be tangibly more valuable than gaining a degree.

The results will surprise some students. Startups research recently uncovered that today’s UK graduates expect a base salary of over £5,000 more than the average starting salary.

The biggest disparity between apprentices and degree holders is in the design, creative, and performing arts industries. In this sector, mentees earn around 40% more than university graduates.

And that’s before factoring in the huge toll of student debt. Most institutions today charge £9,250 per year of study; amounting to an average debt toll of just under £28,000.

Apprentices, meanwhile, get a tuition-free route to a career and generally qualify with no debts, and start earning from day one.

The data also reveals the impact of apprenticeship programmes on the retention and future employability of apprentices. 96% of Multiverse’s early career apprentices have stayed in work or training after their apprenticeship.

Notably, the group’s employability rating exceeds those of graduates. Employment for uni leavers was just 87% in 2022.

This suggests that modern employers are wising up to the long-term benefits of hiring apprentices, as an effective method for developing motivated, skilled, and qualified workers.

TikTok has been fined £12.7m for misusing children’s data, following an investigation conducted by the Information Commissioner’s Office (ICO), which found that the platform breached data protection laws.

This follows a string of controversies revolving around the social media platform, including a ruthless questioning of its CEO in the US Senate, and a recent ban on UK government devices.

The accumulation of bad headlines has cast a dark shadow over TikTok, which is cause for concern for SMEs that have plugged their marketing strategies onto the platform.

Amid the rising tide of TikTok controversies, should small businesses think twice before betting on the upstart app for their marketing?

Huge user engagement for SMEs

Some 47% of users say TikTok is the platform they use most to engage with SMEs. On top of this, 77% said they came across small businesses on the platform before discovering them anywhere else.

Looking at things from the perspective of SMEs, 73% say TikTok has helped them reach new customers, and 78% saw a positive ROI after integrating the platform into their strategy.

The escalating distrust in TikTok’s use of sensitive data could spell disaster for those that use TikTok as a marketing lifeline. This could particularly impact SMEs that use it as a channel to connect with younger audiences.

Why diversification of channels is key

Breaking news of TikTok’s misuse of children’s data could be highly consequential for SMEs that take advantage of the platform’s high marketing ROI. However, to Joseph Black, Co-Founder of UniTaskr, the headlines haven’t been a reason for panic.

“I think, naturally, it plays a concern, because it does play a big part of our business. But, diversification is also a key word,” says Black. “You should never really be relying on one platform to drive all of your growth.”

TikTok made a place for itself in the social media marketing leagues, as it allowed SMEs to experiment with short form content that could be quickly created for a low amount of resources, and potentially go viral. This has sped up the timelines of marketing campaigns and injected a new stream of creativity into advertising. In fact, 81% of SMEs say that advertising on the platform makes them think outside the box.

“From an organic standpoint, once we’ve got an understanding of what works well, it’s quite easy to alter your paid strategy to be in line with that,” explains Black.

However, this bitesize form of marketing is no longer restricted to TikTok. It also lives on YouTube Shorts, Instagram Reels and Snapchat. This gives opportunities to SMEs to carry over marketing strategies to other platforms to mitigate the reputational risk TikTok may introduce if further bad press hits.

“I think the beauty about the fact that all these platforms have now adapted to short form content means that you can equally repurpose similar content on one to another,” reveals Black. “There’s no harm from the small business perspective in repurposing that same content now so that they can at least start to build a greater audience.”

Will TikTok be banned?

While the bad TikTok press does warrant concern, it’s still unclear whether there will be a fully fleshed ban of the app in the UK.

Black doesn’t think there will be one. “I completely appreciate everything that’s going on, but I’d find it very surprising to believe it will be taken down.”

This is not the first time this question has been asked. Back in 2019, criticism was raised in the US about TikTok’s censorship, privacy, and child safety.

“It’s similar to what happened a few years ago, they put these things in place, they scrutinise where they need to, but ultimately, it opens up dialogue for where potentially, the platform can do better to address those concerns.”

If anything, what is currently unfolding is a correctional period that other social media platforms have experienced. Take the infamous Cambridge Analytica data scandal with Facebook which misused user data for political advertising. Although Facebook was fined $5 billion by the US Federal Trade Commission due to privacy violations, the platform continued to operate.

There is no guarantee that the story will play out in the same way it did for Facebook. But, the record does show that a social media giant doesn’t simply disappear overnight.

“In my mind, I feel that it’s a correctional period which will do better for the platform that will lead to tighter restrictions on data and age restrictions,” explains Black.

Mitigating the TikTok risk

Regardless of how cloudy the future of TikTok looks like, it continues to operate and offer monetisation channels to SMEs.

“It’s a bit of a fine line between wanting to diversify and minimise future risk, but equally in the short term, still driving high performance results given that one platform is currently operating better than others,” says Black.

SMEs should be looking to gradually diversify their channels to prepare for a potential TikTok storm. “In a post-apocalyptic world where TikTok gets taken down tomorrow, the [SMEs] that are really going to suffer are the ones that haven’t actually built audiences in other places,” predicts Black.

However, as SMEs look to diversify and nurture their communities in other social media gardens, they should carry tools and principles that have made TikTok a raging success amongst marketing teams.

One of those principles is the authenticity that comes from face-to-camera content that is not highly edited and feels more personal. “Tying that authenticity and very customer focused content that you see on TikTok over to other channels and building up a more defined audience on them is what I would be looking to do,” recommends Black.

What comes next?

If what is currently unfolding is TikTok’s correctional period, it begs the question of what a newly polished TikTok could look like.

Black’s TikTok utopia would feature a renewed approach to their ad platform that injects vitality back into organic reach. “I’d like to see organic come back to perhaps where it used to be because I think it presented more opportunity for the smaller guys that don’t necessarily have massive budgets to pump into advertisement”

As users become increasingly preoccupied about how the platform could intrude into the privacy of their data, it would be expected that TikTok offers more transparency in this arena. Importantly, this transparency would also give more confidence to businesses that want to continue to market on the platform.

What remains certain is that both SMEs and consumers will continue to closely monitor the TikTok headlines. But the jump scare caused by the recent controversies serves as a cautionary tale to businesses about the importance of diversifying marketing channels and building communities across multiple platforms.

The Global Talent visa scheme, a visa endorsement programme previously run by Tech Nation, will continue despite the growth network’s closure earlier this year.

The Home Office has confirmed that Tech Nation will still assess digital technology applications for the Global Talent visa, despite it having officially ceased operations on 31 March 2023.

Describing the change as a “new phase” for the scheme, the government says the interim solution will remain in place until a new body can take on full handling of the programme.

Despite the last-minute nature of the announcement, the news will be welcomed by tech startups. Many are already struggling to fill hiring gaps due to a lack of job-ready digital talent in the UK.

Following this announcement, applicants will still be able to use the Tech Nation website to:

• Continue an application previously started
• Start a new application

Global Talent visa vital for plugging the UK digital skills gap

Startup owners are still recovering from the shock closure of Tech Nation. The growth network had previously nurtured over a third of the UK’s tech unicorns, including Startups 100 alumni Deliveroo, Monzo, and Revolut.

However, the network ceased operations on 31 March after the government controversially reallocated its £12m Digital Growth Grant to Barclays Eagle Labs.

Tech Nation’s defunding proved unpopular with the startup community. It also raised questions about the future of the Global Talent visa.

Visa challenges caused by Brexit, coupled with the ‘Great Resignation’ (an ongoing trend of mass employee quitting), have worsened the UK’s substantial digital talent gap. UK startup demand is vastly outmatching the supply of highly-skilled tech workers.

Growing need to hire from abroad

Earlier this year, Startups research found that company bosses are increasingly looking abroad to plug gaps. Searches for ‘skilled worker visas’, the documentation required for employers to employ highly-skilled non-UK resident workers, hit a record high in January.

The Global Talent visa has been the main port of entry for overseas tech talent since 2019, with Tech Nation processing thousands of applications each year. Between 2019 and 2022, the scheme accounted for a massive 74% of successful grants to foreign tech workers.

Its continuation provides welcome respite for tech startups, many of which are still settling their nerves after the near collapse of Silicon Valley Bank UK.

Nadia Zhuk, a Holistic Global Talent visa Coach, summed up the news in a tweet last Friday, describing it as “a bit weird, but everything is weird lately, so I suggest you apply before it gets any weirder.”

Tech Nation closed down, but you can still apply for Tech Nation visa: https://t.co/xPcgJ468Z4
It's a bit weird, but everything is weird lately, so I suggest you apply before it gets any weirder.

— Nadia Zhuk – Remote Vinyl Shopping (@beetlehope) March 31, 2023

Global Talent visa: what’s next?

It’s undoubtedly great news that the government has moved to provide a safety net for the scheme. But, it remains unclear who will emerge to pick up the slack in the long term. A new endorsing body will apparently take over responsibilities soon, although an official timeline has not been confirmed.

In an update published on GOV.UK, the Home Office said: “We’re committed to maintaining a strong digital technology offer as part of the Global Talent visa.

“We’ll try to minimise disruption to those applying for the visa while a new endorsing body takes over from Tech Nation. We’ll provide a further update in the coming weeks.”

Hiring from abroad? Check out our employers’ guide to Right to Work Checks to ensure that any new hires have the legal right to work in the UK.

Pretty much all of us in the UK are currently worried about money. Inflation has raised the prices of almost all essential goods, whilst at the same time triggering a fall in real wages that has drastically weakened spending power.

But, according to a new survey by money.co.uk, the fallout is hitting certain age groups harder than others – alerting small business owners of the need to tailor aid to staff members depending on their specific life stages.

The financial advice website polled 2,061 workers to examine the generational impact of the cost of living crisis. Based on the results, the downturn has wreaked the most havoc on young peoples’ mental health, while older team members have faced greater financial hardship.

Below, we’ll dive into the data in more detail to determine which support measures will bring the greatest results, based on employee demographics.

Young people face biggest hit to mental health and wellbeing

Generation Z staff members – those aged between 16-24 – have borne the brunt of the financial stress caused by today’s poor economy. money.co.uk’s research shows that 56.29% of this group have seen a negative impact on their mental health and wellbeing.

One in eight reported they were ‘severely suffering’ over money concerns as wages nosedive, the most of all groups analysed.

The money.co.uk findings come after research by London Heritage Quarter found that 54% of Gen Z workers feel lonely when working from home.

To combat feelings of isolation, many are choosing to return to the office as a way to socialise without spending money on going out.

money.co.uk also asked respondents what measures they had taken to combat the financial pressures.

43.58% cut down on their food shop and other essentials, while 38.55% were using less energy in their homes. 26.12% said they have borrowed money from family or friends to cover debts, the most of any age group.

How should employers support Gen Z?

Hosting work parties and social gatherings is a good way to encourage team members to develop interpersonal relationships, reducing the risk of loneliness amongst younger colleagues.

This will help to build a positive organisational culture and improve staff morale. In turn, managers will have an easier job of attracting and retaining young talent for lower staff turnover.

Employers might also consider investing in office perks like free meals or subsidised travel, to show awareness of how rising inflation has limited employee spending.

To prevent and address poor mental health in the workplace for every age group, line managers should be trained on the support processes such as managing absences and performing consistent check-ins.

Access to occupational health services such as counselling should also be given, when necessary.

Millennials experience most money trouble

While younger people have seen the most negative impact on their mental health, millennials (those aged 25-34) report the biggest hit to personal bank accounts.

In last month’s Spring Budget, the government announced an extension to free childcare for those with children aged between one and two.

This is intended to offer more financial breathing room for working mothers and fathers.  Nursery and childcare costs have become unaffordable for many.

A recent survey by Indeed shows that the policy has encouraged parents to up their average working hours. However, the problem is not fixed. The same report found that, of those parents  planning to return to work, 44% said they would look for a part-time role compared to 22% who will look for a full-time job.

money.co.uk found that one in five parents aged 25-34 reported an increase of £50 to £100 in their monthly childcare costs.

Monthly dependent care expenses amongst millennials were £157.27, on average. That’s 48.58% more than over 55s and the most of all age groups.

This group also reported the highest increase in their monthly bills on average, and were 13.90% more worried about mortgage repayments than any other group. One in five had used their overdraft to pay for bills, the highest analysed.

How should employers support millennials?

We spoke to Brett Wigdortz, CEO of childminder startup tiney.co, about how employers can show their appreciation for working parents.

Wigdortz advised introducing flexible hours, by first cementing a hybrid working policy. Doing so ensures team members can change their working style day-to-day depending on care commitments.

More employers have also began exploring the potential of a four day work week, a reduced-hours policy that gives workers the option to complete their job role in four days, rather than five.

Flexi-hours is another option that allows the staff member to bank any extra hours worked to take from a future working day.

Similar to their Gen Z coworkers, any allowances that can offset extra spending on bills, such as subsidised lunch and travel, will also be welcomed by millennial workers.

Older workers least likely to struggle in the cost of living crisis

Those 55 or older have struggled least with the cost of living crisis. In fact, only one in four were affected at all: less than half the amount of 25-34 year olds (60.89%).

Typically without the burdens of young children or mortgage payments, this group appears to have seen the least change to their lifestyle. 73.41% report the cost of living having had no impact on mental health.

People older than 55 are least reliant on benefits, with one in five requiring government assistance.

How should employers support older workers?

It’s easy to view money.co.uk’s research as a signal that the over 50s are a ‘safe bet’, as a group that will be unbothered by the cost of living crisis.

That said, over 55s have experienced the smallest pay rises in the last year of 3.03%. That’s a noticeably smaller increase than 16-24 year olds (8.46%).

This group is actually at high risk for leaving the workforce. Parliamentary research indicates that more people are choosing to take an early or phased retirement.

Our own guide to hiring over 50s workers highlights the many strengths that older colleagues can bring to the workplace. These include new perspectives, broader experience, and also mentoring opportunities.

If you are using the cost of living crisis to re-think or design your benefits offering, don’t overlook the bonuses that can motivate older colleagues. For example, a more generous retirement package.

What can SMEs learn from the money.co.uk research?

Diversity is one of the most powerful tools to make your workforce stand out from competitors.

Small businesses tend to have smaller teams and less emphasis on hierarchy. Considering this, bespoke benefits – strategically crafted based on the workforce’s unique needs – will provide more value than blanket policies.

SMEs are themselves struggling to survive in the face of an impending recession. In this depressed business climate, knowing where to target any additional compensation is the most effective and efficient route to supporting employees in the difficult months ahead.

The money.co.uk research gives a broad overview of the challenges currently faced by specific age groups. Still, conducting an employee survey is the best method to gauge staff opinions on what is or should be included in your perks and benefits policy.

Staff members will be given allowances that are directly answering their biggest concerns, while employers can feel confident that the budget has been well-spent.

Admin will understandably be the biggest barrier to this approach. Amongst the tools to help is employee management software. This works to assist human resource teams with things like salary details, bonuses, and medical information.

Nebel Crowhurst is CPO at Reward Gateway, an employee engagement platform. Crowhurst says: “Now more than ever, employers need to implement initiatives that help employees’ paychecks go further.

“Using a digital employee engagement platform is a cost-effective, sustainable way for employers looking to support staff during trying times to show you care and boost their financial welfare.”

Want to streamline employee benefits?

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Female entrepreneurs are rapidly closing the gender gap when it comes to running a business. According to new data from GoDaddy, the number of women-led businesses has surged from 36% to 47% within the last 12 months. (Now, if we could only get some venture capital funding…)

The survey data shows the beginnings of an increasingly positive growth trend.

However, as Startups highlighted in our independent International Women’s Day study on the gender funding gap, female entrepreneurs often face additional challenges when starting a business. These include facing unconscious bias from potential investors, and higher workloads than male counterparts.

The GoDaddy survey also revealed that among female entrepreneurs:

• 82% are responsible for the majority of domestic household duties
• 44% say the costs associated with childcare are a barrier 
• 46% of the women have children under 18.

Catherine Sweet, founder of Bobcat Gallery, said: 

“Caring responsibilities towards members of my family held me back from starting my own business for a long time. I could never find the time, resources or mental space.”

While aspiring female business owners weigh the benefits and drawbacks, they are still coming to the conclusion that a business is a worthwhile venture to be pursuing right now. 

All in all, 78% of female entrepreneurs said they believe owning a business provides more flexibility and opportunities than working for someone else.

The cost of living crisis is causing women to think outside the box and discover new avenues for income that align with their current lifestyles.

In general, set-up costs (52%) and time commitments (48%) were highlighted as the biggest obstacles to women starting a business. 

However, experts believe that the normalisation of working from home and other flexible working options mean women are finding ways to overcome or mitigate these obstacles. 

Tamara Oppen, GoDaddy Vice President, states: 

“The rise in flexible working patterns and working from home has made it easier to fit in running a micro business alongside other commitments. 

“We are saluting women who are achieving great success against the odds. They really are unstoppable.”

Changes made to the R&D Tax relief scheme as part of the latest budget announcement will complicate access to tax relief by SMEs conducting R&D.

The Chancellor announced the enhanced deduction SMEs could claim for qualifying R&D expenditure will reduce from 130% to 86%.

For SMEs who are heavily involved in R&D, the repayable tax credit will remain at 14% if 40% of their total expenditure is R&D related.

By contrast, the Research and Development Expenditure Credit (RDEC) for large companies will increase from 13% to 20% of qualifying expenditure. As a net result, tax relief has favoured large enterprises and has reduced for SMEs.

Under these new rules, for every £100 that an SME invests in R&D, only £18.60 will be returned as a repayable tax credit. This means companies will be £14.75 worse off than under the previous tax regime. Although SMEs heavily involved in R&D are better off than the average small enterprise, they will still incur a loss of £6.38 for every £100.

The end of the Silicon Valley dream?

When explaining the changes, the government stated “R&D tax reliefs have a key role in incentivising R&D investment by reducing the costs of innovation.” Innovation is at the heart of the chancellor’s mission to transform the UK into a quasi-Silicon Valley. Yet, changes to the R&D scheme imply an unwillingness to offer the necessary support to SMEs.

Mike Dean, Co-Founder and Managing Director of R&D tax claims startup Whisper Claims is not impressed.“My personal opinion is that this is driven by the Government’s desire to have a more easily managed scheme, and has nothing to do with the potential impacts on businesses,” he tells Startups.

“The smallest of businesses are those that require most help and support yet all of the recent changes are balanced against them – this seems like a fundamental error by the Government.”

Sarah Barber, Jenson Funding Partners CEO, echoes similar concerns. “This will have a significant impact on early-stage tech businesses and Britain’s research capabilities, especially those that cannot devote 40% of their total expenditure to R&D investment.”

Although the emphasis on preventing fraud and neutralising rogue consultancies taking advantage of the scheme is reasonable, gaps remain. “If anything, the announcement regarding R&D intensive SMEs has the potential to make the matter of ‘pushing the boundaries’ of the scheme even worse as advisors look to push claims over the 40% threshold in order to maximise claim sizes and fees,” explains Dean.

In addition to these misplaced incentives, the changes have failed to implement a stronger policing system for the scheme as proposed by a recent House of Lords enquiry. By design, the scheme has symptoms of financial leakage despite attempts to plaster them up.

Whilst the UK Government has committed to expanding R&D spending to £20 billion a year by 2024, reaching 2.4% of GDP by 2027, the distribution of funding based on the changes will be skewed towards larger enterprises.

Flawed by design

A recent study reveals that the issues with the R&D scheme are long drawn and do not simply stem from recent budget alterations.

Over the last 18 years, £293 million of funding (5% of the total) was committed to 2,270 companies that have since dissolved. £1.05 billion was invested in 2,630 companies identified as being at high risk of dissolution (18% of funding to commercial entities).

Robert Garbett, CEO of global drone consultancy Drone Major Group, is adamant that the longstanding R&D strategy is fundamentally flawed. “Many of the innovation funding organisations that distribute much of this funding are private companies whose entire business is based on bidding for and expanding Government money,” he explains.

“This has resulted in the emergence of a self-perpetuating industry focused almost entirely on handing out taxpayers’ money, without a proper strategy for how to bring important emerging technology to market.”

The lack of a robust commercial strategy, in Garbett’s view, is making it harder to bring emerging technologies into the mainstream and is corroding the R&D Tax relief with short-termism.

An R&D Scheme that makes Startup Britain a reality

Although the numbers could encourage risk aversion for investments, Dean highlights that by definition R&D is high risk. “This is an area where there will always be a high risk of failure, particularly with start-ups, and this should not be a reason to withdraw funding – if anything it should be the opposite.”

Whilst the numbers seem alarming, they are symptomatic of both the lack of more structured support for recipients of the R&D scheme and the fact that R&D is inherently risky.

That said, Garbett believes there are reasons for optimism, not least the creation of the new Department for Science, Innovation and Technology. “What’s needed is a ‘commercialisation programme with a clear focus: to help attract investment targeted at delivering commercially-viable services to the industry, ” he emphasises.

“Research and development initiatives could then be funded to optimise benefit to the UK economy, resulting in tangible socio-economic benefits including investment growth and job creation, creating a genuine return on investment both for the taxpayers and the UK economy.”

Whilst Startup Britain may not be an overnight reality, establishing concrete and structured support systems to guarantee R&D at all stages of company growth will be a sound step forward.

Two thirds of parents with children aged between one and two say free childcare measures, as presented in last week’s Spring Budget, will encourage them to enter or rejoin the workforce.

In a survey of 1,002 parents, who are either employed, unemployed, or on parental leave, 65% said free childcare would incentivise them to seek additional working hours.

This figure rises to 77% amongst parents who have already given up work due to the cost of childcare. The research was carried out by global hiring platform Indeed.

Business owners are increasingly hunting for ways to make their organisations more parent-friendly, as surging childcare costs threaten the careers of some of the UK’s most talented employees. As they have discovered, the issue is anything but child’s play.

Below, we dig into the Indeed research further to see where the biggest challenges lie for employers, and locate the easy wins.

Government pledges to do more to tackle shortage of childcare providers

The childcare crisis has been threatening UK labour participation for several years now. One report by the Organisation for Economic Co-operation and Development (OECD) states that the UK has some of the highest childcare costs in the world.

Early years care fees are estimated to cost around £105.76 per week, according to the Coram 2022 Childcare Survey.

That accounts for around 17% of the median income for a UK household. As a result, many parents are being priced out of the workforce, choosing care duties over a career.

In a bid to lure more parents back to work, the government pledged 30 hours of free childcare a week for children aged nine months to school age in the Spring Budget earlier this month.

But those who were after immediate financial aid for their toddlers have also been handed a significant roadblock.

Most will find themselves ineligible for the government’s support plan, as the chancellor, Jeremy Hunt has announced that the proposed support will be rolled out in stages. From:

• April 2024 – parents with children over 2 years old can claim 15 hours free childcare per week
• September 2024 – parents with children aged over 9 months can claim 15 hours free childcare per week
• September 2025 – parents with children over 9 months can claim up to 30 hours free childcare per week

Most working parents seek to increase hours, but a return to full-time work remains out of reach for many

In spite of the staggered nature of the government’s childcare support package, the Indeed survey shows promising signs that it will go some way towards bolstering the UK workforce.

Still, the extended timeline of the childcare rollout seems to have halted a complete return to work for parents. Most of these respondents are looking to increase their working hours instead of entering full-time work.

Of those not currently working but are planning to return, nearly half (44%) said they would look for a part-time role compared to 22% of parents who will look for a full-time job.

Parents who had previously cut back on work to care for their children now say they plan to increase their working hours by around 78% to 26 hours a week, on average.

Lower earners plan to increase working hours the most, confirming that they had been most affected by the childcare crisis.

Parents earning £15,000 or less said they would double their working week from 12 hours to 24 hours when the scheme is implemented. In comparison, those earning £55,000 and above plan to increase their hours from 22 hours to 29 hours a week (a 33% increase).

Research shows that parents still face barriers to work – especially mothers

Despite the government’s extension to its free childcare offering, parents still face barriers to expanding their working hours.

Of those that said they would not be looking to increase hours or return to work even when they become eligible for free childcare, the most common reasons stated were:

• Mental health (28%)
• Lack of flexible hours (26%)
• Childcare still being too expensive (25%)
• Lack of remote work opportunities (19%).

Gender seems to be another barrier for parents seeking to balance a job alongside care commitments. Alarmingly, 81% of mothers not working due to the current cost of childcare say it has caused them to sacrifice their careers (compared to 62% of fathers).

Over two-fifths (41%) of mothers felt the opportunity to progress their careers was one of the biggest motivators to increase their work hours or go back to work. Only 16% of fathers felt similarly.

How can business owners support parents returning to work?

Labour market figures from the Office of National Statistics (ONS) show that 79,000 parents dropped out of the workforce between 2021-22 because of care commitments. Indeed’s findings suggest this is due to the financial pressures of using an early years care provider.

Hiring managers are struggling to find talent in a rapidly deserted jobs market. Many are turning to alternative recruitment routes like employing ex-cons or overseas workers.

Some experts have called for businesses to focus on hiring over 50s, many of whom retired during the pandemic. However, rather than attempting to persuade settled older workers to ‘unretire’, many have switched their attention to fixing the childcare barrier by introducing parent-friendly initiatives or policies.

Alongside asking respondents about their career plans, Indeed also surveyed parents on what would get them back into the workforce full-time.

One of the incentives most commonly highlighted was flexible working hours (75%). These were described as far more important than remote working opportunities (43%).

Startups’ guide to the top benefits and perks for retaining employees outlines some of the flexible working arrangements that employers can offer parents. For example, carers’ leave and extended parental leave.

Businesses do not need to move mountains to ease the pressure on parents, however. Small measures that show sensitivity and understanding towards the demands placed on caregivers will still help to boost confidence about returning.

Introducing a hybrid work policy, complete with training for line managers, should be a first step for employers. 40% of those who Indeed surveyed cited an empathetic manager as a key pillar of support for those looking to be eased into more work.

This should not just be offered to those with toddlers or young children. The childcare issue has also been exacerbated by a wave of teacher strikes, which has left those with kids under 16 struggling to find suitable supervision while they are at work.

Bill Richards, UK Director at Indeed said: “[The government pledge] is a step in the right direction but childcare alone is not a silver bullet that will solve worker shortages and returning workers need more than just financial support to build or rebuild their careers.

“Parents seek flexibility, empathy and equality from employers and those who prioritise these requirements stand a better chance of attracting parents back to work.”

At the start of next month, the Energy Bill Relief Scheme (EBRS), the government’s financial aid package for small business utility bills, will end.

Unamusingly timed to coincide with April Fool’s Day, this support wind-down could threaten the future of hundreds of thousands of small firms, according to research by the Federation of Small Businesses (FSB).

The scheme has been an essential support for thousands of firms grappling with rising wholesale energy prices. Replacing it will be the Energy Bill Discount Scheme (EBDS), which is notably less generous than its predecessor.

The FSB estimates that 24% of small businesses – around 1.3 million – are currently locked into energy contracts that were signed last year, at a time when wholesale prices were soaring.

It is now warning that 28% of these – a colossal 370,000 businesses – may need to shrink, restructure, or even close when their bills revert to the higher price.

Rising energy bills threaten small business survival

The invasion of Ukraine last January has triggered not only a humanitarian crisis, but also a shortfall in global oil and gas supplies from Russia. SMEs were hit hardest in the immediate fallout, with many unable to absorb the added fees.

Market prices have since stabilised – although they remain at a considerably high rate – for those who are renewing their contracts in 2023, either on fixed or variable tariffs. But those who fixed last year are locked into a high price. They will see huge increases when the government support ends on April 1, triggering doubts over their future.

As an example, let’s say a pub signed a 12-month fixed contract in August last year. It uses 48,000 kWh per year in electricity and 192,000 kWh in gas.

Based on the Energy Bill Relief Scheme legislation, it would have received a reduction of £60,000 on its estimated £85,000 annual energy bill.

However, once the switch to EBDS takes place, that same business would receive just over £2,000 in support. That will leave it with a bill to settle of nearly £83,000 – at a time when diminished customer spending has already squashed sales figures.

Decimated profit margins

Startups has previously spoken to multiple SMEs who said that hiked energy bills had decimated their sales and profit margins from 2022 onwards.

One local shop owner had been forced to shut up shop and move online as a result of price squeeze. Another admitted they had only turned the heating on once in the entire month of December.

Illustrating the scale of the problem is Tim Martin. The owner of stein-sized pub chain, Wetherspoons, who we spoke to last year about the decline in pub numbers, last week announced a 90% profit loss in the six months leading to January.

Tina McKenzie, Policy Chair of the Federation of Small Businesses (FSB) said: “The jump in energy bills will be a shock to hundreds of thousands of small businesses, who signed up to fixed contracts when the government discount was guaranteed under EBRS.

“In a week’s time with the rollback of government support, this group of vulnerable small firms will see their bills revert to high rates. This cliff-edge will also hit consumers as businesses will have to raise prices to cope with soaring bills, driving up inflation.”

FSB: “government and providers must show sensitivity to small business struggles”

Earlier this month, Startups heard from a number of entrepreneurs who were hoping for more support for energy bills to be announced in the March budget. Instead, they were handed a rise in Corporation Tax and small business rate valuations that will dampen profits and slash incomes.

With the government set to pull the financial rug out from under SME feet this Saturday, the FSB is calling on energy companies to show sympathy to the money troubles of UK firms.

It says providers must give customers in a fixed contract the option to renegotiate or ‘blend and extend’ their energy contracts. This will leave them open to benefit from the lower wholesale energy prices that are now available.

Business owners worried about the impact that Saturday’s price rise will have on their utility bills should contact their provider directly to flag any concerns as soon as possible. They will be able to set up a repayment plan to settle any debt.

In the meantime, our guide on budgeting for rising energy costs has more information on how to strengthen cash flow for the impending hit.

The FSB has also lobbied for the introduction of a government ‘Help to Green’ scheme, which would provide SMEs with a £5,000 voucher to invest in energy-saving or energy-generating measures.

More support for a green transition is something that Elizabeth Jones, owner of Balham-based children’s clothing and gift shop, Natural for Baby, was hoping to see in the Spring Budget.

“I believe it would be a much fairer system for those of us on green energy tariffs to have a bigger discount [on bills],” she told Startups. “I can’t see why we should pay more for gas and oil when the providers we use should be investing and using alternatives.”

Last year, Startups spoke to one small business owner who managed to halve their energy bills by using green technologies including an EV vehicle, solar panels, and heat pump.

Tina Mckenzie elaborated: “There’s much that could and should be done rather than leaving small firms high and dry. Our message to the government is: show the small business community that they’re being treated as equal partners in this energy price crisis.

“That would keep 370,000 small firms off the cliff as well as the jobs and communities which depend upon them.”

Businesses are being told to prepare for requests from employees to offer a four-day working week, after new research shows that 7 in 10 intend to ask their employer to embrace the initiative this year.

Global recruitment agency, Aspire, polled 400 UK workers following the success of the world’s largest four-day working week trial, which took place between June and December 2022.

56 of the 61 businesses that piloted the scheme announced they would extend it after reporting seeing a marked increase in productivity and overall job satisfaction. This includes 18 which have made it permanent.

Now, Aspire suggests that companies prepare for more requests. Many have already begun adopting the working model as a way to stay ahead in an increasingly competitive jobs market.

Four-day working week meets employee demand for flexible working

The Aspire survey found that the vast majority of company employees (69%) plan to ask their employer to implement a four-day working week.

Of those surveyed, 24% said they did not plan on asking their employers, while 7% of these surveyed already work a four-day week.

On top of the poll, Aspire has released its quarterly research into job seeker requirements. The report found that flexible working for better work-life balance is now the second most influential factor when looking for a job, just behind salary.

Terry Payne, Global Managing Director of Aspire, comments: “Flexible working and work/life balance are becoming more and more important to candidates. Increasingly, they dictate whether or not someone applies for a job, let alone accepts or rejects an offer.”

Why offer a four-day working week?

Four-day working weeks are not just compressed hours. Instead, employees work around 28 hours per week across four days and have three days off instead of the traditional two. Crucially, this comes with no cut to pay.

What was once a radical idea is fast becoming mainstream. Since the COVID-19 pandemic, more companies are choosing to trial the four-day week approach, inspired by how easily the world switched to new ways of working.

There are plenty of motivations to do so – number one being the health and wellbeing benefits for staff. According to the official report released following the end of the trial, the vast majority of workers enjoyed significant gains from its introduction.

‘Before and after’ data shows that, at the end of the trial, 39% of employees were less stressed, and 71% had reduced levels of burnout. Likewise, levels of anxiety, fatigue and sleep issues decreased, while mental and physical health also improved.

This can boost overall morale and engagement; two key drivers that have a direct influence on organisational culture and employee satisfaction.

Financial savings are another win. Running costs, like utility bills, can be significantly reduced, as the office would be closed for an extra day a week. Employees can also save on commuter costs and lunch expenses, both of which have shot up as a result of inflation.

Should you consider introducing a four-day working week?

Worker shortages are currently stalling small business recruitment drives, making it difficult to fill gaps in many workforces.

In this context, updating your benefits and perks package to include the offer of a four-day working week seems wholly positive. Not just for making new hires, but also for improving retention and reducing turnover. Plus, the government’s flexible working bill has put pressure on employers to update their current provision.

It goes without saying, however, that introducing such a major change to working styles poses challenges. Business owners should not implement a four day working week without first designing a well thought out policy.

The model will not suit every firm. Hospitality SMEs, for example, typically need to be staffed seven days a week. Closing your office one day a week could irritate customers. Some employees may struggle to adjust to working four days, slowing productivity.

There is also little room for backpedalling. Once employees have had the taste of a three day weekend, they will likely push back if asked to revert back to working five days a week.

Nonetheless, Aspire’s research shows that four-day working weeks are becoming more popular amongst the UK workforce. Forward-thinking senior leaders should now discuss the concept, and arrive at an argument for or against trying it out.

As Terry Payne from Aspire adds: “Our findings suggest that four-day working week requests may come flooding in.

“With this in mind, employers would be wise to assess if this initiative is feasible. This preparation is vital in being able to let staff and potential employees know where they stand.”

To help decide if it’s the right option for your company, our guide to the four-day working week outlines the key pros, cons, and considerations.

Welcome to Startups’ Weekly Round Up, where we bring you the latest headlines to keep you in the loop with everything that’s affecting SMEs in the UK.

The highlights this week:

• TechNation’s final report predicts the UK tech sector could reach $4tn by 2032 in value
• Almost half of UK workers want to upskill in the midst of an impending recession
• The weaknesses behind the R&D Scheme

Some Stats to Start Up your week

• Strikes cost SMEs 680,000 days of trading per month since the summer.
• Only 30% of organisations have updated their absence policies to reflect hybrid working.
• 31% of consumers say that quality of products and services is more important now than it was a year ago, despite the cost of living crisis.
• Loss of business confidence has lowered high street banking lending to SMEs from £4.8bn in Q4 2021 to £4bn in Q4 2022.

11 Downing Street and the UK economy – What should startups know?

💀 Upskilling to avoid the job killing → almost half of UK workers want to upskill in the face of a potential recession, but many feel employers are blocking them from doing so. 76% of workers are willing to upskill in their own time if the training was funded by employers. However, there is a generational divide. 61% of over 45s are not looking to upskill, believing their current skills will help them weather the economic storm. In contrast, under 35s are looking to diversify their skillset or have already done so to prepare for a potential recession.

💅 The importance of giving your office a glow up → office appeal is yet to be revived three years after the first COVID19 lockdown, giving workers less of an incentive to commute into work. A study conducted by Unispace of 3,000 office workers across Europe revealed that 74% of staff would be happier to return to the office if it had separate spaces for collaborative activities and individual focus work. Lawrence Mohiuddine, CEO EMEA at Unispace confirms, “Simply mandating returns without rethinking the workspace will be detrimental to staff retention, motivation and engagement.”

🔍 R&D dead ends → over the last 18 years, £239 million of funding (5% of total) was committed to 2,270 companies that have since dissolved. Further, £1.05 billion invested in 2,630 companies identified as being at high risk of dissolution. This represents a low return on investment for taxpayers’ money through the R&D scheme. However, the creation of the DSIT could potentially represent an opportunity to correct these gaps and short-termism in R&D funding. Robert Garbett, Founder of Drone Major Groups,explains, “Many of the ‘Innovation funding’ organisations that distribute much of this funding are private companies whose entire business is based on bidding for expanding Government money.” He reveals, “This has resulted in the emergence of a self-perpetuating industry focused almost entirely on handing out taxpayers’ money, without a proper strategy for how to bring important emerging technology to market.”

The Future of Tech: TechNation’s Final Report

TechNation’s final report, following its closure, predicted that UK tech has the potential to quadruple in value by 2023 if the right conditions are nurtured. Accounting for the peaks and troughs of the UK’s tech growth rate over the last decade, the UK tech ecosystem could reach $4tn in 2032 if better conditions for scaling are created and the current momentum is maintained.

However, there are some emerging challenges that could hobble this momentum. Although UK startups raised £30bn in 2022 –72% higher than in 2022 –, it is lower than in 2021 when funding peaked globally. The UK also took back its position as the third largest ecosystem in the world for venture capital investment in 2022 though is likely to see increasing pressure from India, Indonesia and Mexico over the next five years.

2022 also saw a decline in the rate of unicorn creation at 4%, underpinned by a reduction in the number of new unicorn companies being founded year on year for the last 18 months.

Stephen Kelly, Chairman at TechNation, is clear who is responsible. “The government needs to develop a plan that creates the environment and platform for UK tech to be the rocket fuel for growth in the economy and address some Achilles heels of the UK economy.”

The cost of living crisis continues to sicken business health as 95% of SMEs say it is negatively impacting workplace culture. This is forcing enterprises to reduce staff promotions and office perks.

Almost all (99%) of SMEs said they have noticed behavioural changes across their team as a result of the pressure inflicted by the economic climate

48% of business leaders are replacing staff socials, gifts, and other office ‘niceties’ to prioritise training and pay rises, according to the State of Spending report released by Pleo, a business spending solutions enterprise.

This bleak social business terrain is unfolding against a snowy economic climate that saw a Consumer Prices Index (CPI) rise of 10.4%.

61% of UK SMEs have cut down staff bonuses and the same percentage have reduced or put an end to staff socials.

Jessie Danyi, Belonging and Impact Lead at Pleo says, “Our research has shown that workplace culture is one of the greatest casualties of the cost of living crisis.”

More flexibility needed to support staff in 2023

As workplace culture dampens, employee engagement is taking a hit. 32% of employees say they cannot justify the cost to travel into the office. 35% highlighted commuting costs being too high as the main hurdle to coming back into the office.

This is creating a vicious cycle where maintaining workplace culture becomes harder as team leaders try to resolve the growing issue of a disconnected workforce and low employee engagement.

Besides straining workplace culture, the current economic situation is also multiplying demands for more salary flexibility. 29% of employees have asked for earlier salary payments to help keep pace with increasing financial outlay.

Despite the inevitable negativity these statistics invoke, Danyi points out that employers can still create positive opportunities from these financial challenges. “I would recommend that right now, business leaders should invest time into building a supportive and flexible workplace culture.”

Committing to business transparency can help bring employers and employees closer together, Danyi also suggests, as well as shorter pay cycles and smart spending cards that negate out-of-pocket expenses.

Whilst the Bank of England announced that the recession in 2023 is expected to be shorter than originally forecasted, SMEs will continue to grapple with the consequences of the cost of living crisis.

Our guide to the top employee benefits and perks has more information on how to support your workplace culture, without sacrificing your bottom line.

Following waves of public and private sector strikes, the past month has seen multiple pay rise triumphs for UK workers.

Last week, RMT workers accepted a salary increase of 14%. Aldi also changed its hourly rate to £11.40 per hour, joining fellow retailers like Pret a Manger in upping rates.

As more employers attempt to offer a competitive salary to attract and retain talent, data from the Office of National Statistics (ONS) shows that average weekly earnings by industry increased by 4.97% (excluding bonuses) between January 2022 and 2023.

It’s not all good news, however. Real wage growth for UK workers declined 3% during 2022 according to research from the Trades Union Congress (TUC) – among the largest falls in growth since comparable records began in 2001.

Today, the Bank of England announced that the rate of inflation has made a surprise jump to 10.4%. With little respite on the horizon for employees, it is paramount for companies to provide financial support for team members in the months ahead.

Below, we offer a sector-by-sector breakdown of the rate of pay progression in the UK, and advise how employers can remain competitive when rewarding staff members this year.

Which sectors have had the biggest annual wage growth?

Startups has analysed historical data from the ONS salary survey, which is released each month, to see how remuneration has developed between January 2022 to 2023.

According to the findings, the largest private sector wage increases have occurred in the professional, scientific, and technical activities. On average, pay has surged by 9.5% in the past year.

This is likely due to the digital skills gap, which has led many companies in the technology sector to search overseas to find in-demand expertise.

The issue has also been exacerbated by the closure of Tech Nation, whose Global Talent visa scheme played a key role in bringing thousands of talented tech workers to the UK.

The industries with the lowest pay rises include arts, entertainment, and recreation (2.26%) and education (2.95%).

That businesses in the education sector have not upped staff payments is likely due to the ongoing childcare crisis, which has seen the number of childcare providers in the UK drop by 4,000 between 2021 and 2022.

In his recent Spring Statement, chancellor Jeremy Hunt announced more financial aid for early years childcare providers. He said the government will offer up to 30 hours of free childcare support per week for toddlers under three in the March budget. However, this will not be rolled out until 2025.

Why is it important to offer competitive wages?

The Great Resignation has seen huge swathes of staff members packing up their desks and switching to better, often more highly paid roles. As a result, the majority of businesses have been forced to add high staff turnover to their list of economic woes.

While wages are not the only incentive for people searching for new roles, they remain a big influencing-factor for job seekers.

That’s why it’s crucial for companies to revisit employee pay calculations, to ensure they are offering the right amount for the position advertised. Researching the average amount that competitors are offering new hires (also known as industry benchmarking) is the best way to do this.

Against a backdrop of worker shortages, not to do so means companies risk losing out on top talent to rivals. Forward-thinking companies have already begun drawing up plans to meet heightened salary expectations – particularly evident amongst university graduates.

Last month, the CIPD’s quarterly ‘Labour Market Outlook’ reported that 55% of employers said they expected to raise base pay by 5% in 2023, in order to meet recruitment and retention challenges.

Our full guide on how much to pay your staff has more guidance on working out salary benchmarks.

What if I can’t afford a pay increase?

Suggesting that companies pay their staff more is a bit like proposing that companies make more profit: it’s all a bit Captain Obvious.

Most firms would offer their staff more money if they could. But the cost of living crisis has hit employers as well as employees.

For many the need to recruit talented workers for growth is trumped by the need to survive record high energy bills that has contributed to blisteringly high inflation and unaffordable supply chain costs.

In this context, business owners should explore alternate routes to paying staff. Our guide to employee benefits has over fifty perks and subsidies that can relieve financial stress for colleagues, without wrecking the firm’s bottom line.