Small companies bear a disproportionate amount of the regulatory burden, particularly around ever-changing employment legislation, says the Federation of Small Businesses.
Small companies bear a disproportionate amount of the regulatory burden, particularly around ever-changing employment legislation, says the Federation of Small Businesses (FSB).
The FSB argues that regulation increases the risks associated with hiring, which are particularly acute for small businesses, and can affect employers' willingness to hire in the first place.
The lobbying group says that it is small firms that create jobs and take on people who are shut out of the labour market – more than eight in ten unemployed people that find work do so with a small business.
However, legislation and regulation is designed to protect those already in employment while the people most in need of help are outside the labour market.
Creating policies that undermine the 'inherent flexibility of small firms' to recruit staff means they will become less able to take on people from these disadvantaged groups, says the Forum.
The increasing scale of regulation also means that growth prospects are slowed, and confidence to take on staff is reduced.
Recent FSB survey work shows that 30 per cent of respondents believe that employment law is a barrier to taking on new staff and 26 per cent suggest that regulation in general limits their operations.
More than one in five (21 per cent) say that the risk of litigation or employment tribunals is a significant factor limiting their recruitment.
FSB national chairman John Walker says, 'Too many policymakers don't think about the consequences of policy for small firms or for the people that are on the outside of the jobs market trying to get in. Those people are more likely to be taken on by a small business due to their flexibility and so constant tinkering with the system will undermine this flexibility and result in fewer jobs being created.
'We know that employment legislation is designed to protect those that are already in employment, but it doesn't help those people who are not working and it can make it more difficult for them to get a job in the first place.'