How SMEs Can Use Kickstart To Take A Risk Free Bet On Growth

Small and medium-sized enterprises are responsible for most job creation in advanced economies, studies repeatedly show. They may employ fewer people than their larger counterparts, but because they’re more likely to be growing quickly, they account for a disproportionate share of new employment.

You would think, therefore, that any government initiative marketed under the “Plan for Jobs” banner would focus on SMEs. Not so, however, in the case of Kickstart, the UK Government’s flagship project to get young people into the workplace despite the economic impacts of the Covid-19 pandemic. Kickstart requires employers to take on a minimum of 30 workers, which would appear to rule out the vast majority of SMEs from this element of the Chancellor of the Exchequer Rishi Sunak’s Plan for Jobs strategy.

The good news, however, is that it is still possible for SMEs to take part in Kickstart. They simply have to organise themselves into groups that are large enough to get over the threshold on a collective basis. It’s fine for 10 small companies to come together and take on three workers each, for example, And helpfully, there are now organisations setting up schemes to manage this process on SMEs’ behalf. The Federation of Small Businesses announced one such scheme earlier this week, which should be enormously helpful.

That’s very welcome because Kickstart is a generous initiative which could really benefit many SMEs, helping them to plan for growth even during these highly uncertain times.

Under Kickstart, employers agree to offer work placements of at least 25 hours a week for a six-month period; the Government picks up the bill for paying each recruit the minimum wage, and also hands over £1,500 to cover costs such as staff training. At the end of the six months, the employer can decide whether to offer a permanent job but is under no obligation to do so.

Kickstart is aimed at unemployed young people in particular. Recruits must be aged between 16 and 24, and currently receiving the Universal Credit benefit. The terms of the scheme mean they’ll be better off financially during the placement – plus they’ll be acquiring new skills and experience that will hopefully improve their prospects in the jobs market even if they don’t get taken on by the employer with whom they undertake the placement.

From an employer’s perspective, Kickstart could be a great way to deal with the unknowns of the months to come. In sectors where Covid-19 restrictions are more relaxed, many businesses are now seeing rising demand; others are reaping the rewards of changing their business model to adapt to a different type of market. But while businesses in both these categories may now feel they need to take on staff to respond to this additional demand, they will also be aware that the Covid-19 situation remains highly fluid; many will not want to take the risk of hiring for fear that the recovery could prove temporary. Kickstart, however, provides extra pairs of hands without employers having to make a long-term commitment. Even better, it carries no costs during the terms of the placement.

In other words, this is a scheme that enables SMEs to bring people in without increasing their cost base and without the fear of having to let people go later on. This isn’t to encourage SMEs to exploit the situation – hopefully, many will in time want to offer more permanent employment – but Kickstart does provide important room for manoeuvre at a moment when it is far from clear whether growth is going to accelerate or fizzle out.

The important thing is not to be put off by the headlines about Kickstart, which have majored on complaints that the Government has made it too difficult for SMEs to participate. It certainly isn’t helpful that this scheme has been designed with an extra hurdle for smaller employers to clear, but there are relatively straightforward ways to get around the obstacle – and for many, this effort will be worthwhile