Employee wages in Scotland’s small businesses have risen by 5.7% since November 2024, according to a new report published by Sage.
This was the second largest year-on-year increase across the UK, with Wales also at 5.7% and the West Midlands at 5.8%.
The findings come from the second edition of the Sage UK Workforce Tracker, developed in partnership with Edinburgh’s Smart Data Foundry and The Centre for Economics and Business Research (Cebr). The tracker draws on monthly data from around 200,000 small businesses and millions of employees nationwide.
Across the UK, median gross earnings are up 5.3% year-on-year to £2,170, with take home (net) pay of £1,767 up 3.1% year-on-year.
Highest salary rises were in information and communication at 6.4%, followed by other services, wholesale and retail trade, and construction, with the lowest rises in the arts and entertainment industry at just 1.4%.
Headcount growth in general has slowed however, with changes ranging from -1% to 0.1%, suggesting that businesses are not investing in new people.
Nationally, the total headcount decreased 0.4% from November 2024 but regionally there was more variability. South West, London, and the North East are among the lowest in terms of headcount growth while East Midlands, East of England, and South East are among the highest.
Liam Daly, Senior Economist at Cebr, as quoted in the tracker said: “The Sage UK Workforce Tracker reveals that the headcount among the sample of small businesses contracted in November, compared to the same month a year ago.
“Meanwhile, median earnings growth decelerated year-on-year, reflecting the shifting demand–supply dynamics in the labour market. Looking ahead, the near-term economic outlook remains modest, reflecting weak consumer spending growth and still fragile business confidence.
“On the upside, easing inflationary pressures should set the stage for further interest rate cuts, helping to reduce borrowing costs. Meanwhile, a sustained deceleration in earnings growth will be welcomed by employers as labour costs remain stubbornly high. Measures announced in the Autumn Budget are likely to do little to materially improve the economy’s tepid growth and productivity performance nor spur greater hiring appetite among businesses.”
Year-on-year changes in headcount have varied widely by industry. Public administration and defence headcount had the highest growth of 3.0%while accommodation and food services experienced the largest drop of 3.0%.
Pairing this new report together with the Sage Small Business Tracker (SMB Tracker) shows that this reduction in headcount for accommodation and food services is matched by the largest annual decrease in revenue, a 4.2% decrease. This combination of data ties workforce changes to broader economic conditions affecting revenues.
Dougie Robb, CEO of Smart Data Foundry, said: “It’s great to be supplying data for The Workforce Tracker which gives fresh insight into regional and industry activity for both earning and headcount.
“The statistics can be used alongside the Small Business Tracker to help reveal hurdles and opportunities to businesses, guiding decision-makers toward an impactful, sustainable future.”
