Partner Article

Manufacturing sector is the ‘most concerned’ about the impact of auto-enrolment

Manufacturers are most concerned about the impact of automatic enrolment than small and medium enterprises (SMEs) in other sectors, including construction and media, according to research by business software and services provider Sage UKI.

The government’s pension initiative - which will see all eligible employees* placed into a work pensions scheme - began for the largest businesses in October 2012, but as the time approaches for many of the smaller businesses to implement the scheme the research shows that the manufacturing industry is most concerned about the impact. Over 40 per cent (42 per cent) of the manufacturing companies surveyed are seriously concerned that auto enrolment will damage their businesses compared with a national average of 38 percent.

This concern comes from a number of factors connected with auto enrolment for the manufacturing industry. Almost two thirds (61 per cent) of the small manufacturers questioned are concerned about the cost of making employee contributions and the impact this will have on cash flow, while over half (57 per cent) are concerned about the administrative burden it will place on them. These figures are significantly higher than the national averages of 40 per cent and 51 per cent respectively and significantly more than other sectors, such as media and IT.

The findings raise serious questions at a time when the Government is focused on rebalancing the economy away from services and looking to boost exports. Manufacturing output has just started to recover following years of faltering growth, with the Markit/CIPS UK Manufacturing survey reporting that it has reached its highest rate for more than two years.

Lee Perkins, Managing Director of Sage UKI’s start-up and small business division, said: “Manufacturing forms a crucial part of the UK economy, responsible for around 12 per cent of GDP, nine per cent of the workforce and a massive 46 per cent of exports[1]. While growth has recently returned to the sector, it is important that this is sustained through minimising unnecessary costs and red tape.

“Auto-enrolment is looming large on the horizon for small businesses, but it isn’t too late to keep its impact to a minimum. There are steps businesses can take to help reduce the time and cost pressures, including implementing the right software to help reduce the administrative burden.”

Amongst other key sectors, construction businesses are also more concerned than most about the changes, with 53 per cent worried about the cost of contributions and 45 per cent saying the administrative costs could cause problems.

At the other end of the scale, media and marketing businesses are the least concerned about introducing auto-enrolment in the New Year, with less than a third of respondents (31 per cent) saying it has the potential to damage their business.

This was posted in Bdaily's Members' News section by Sage UK .