Large companies are far more popular workplaces than smaller ones, according to research.
This is hardly surprising because of the financial benefits of working at larger, more established businesses, which far outweigh those at small and medium enterprises (SMEs).
While 70% of people working for large private companies score ‘good’ or ‘great’ for their resilience – which is similar to public sector workers at 69%, figures from the Hargreaves Lansdown Savings & Resilience Barometer show.
But 53% of workers at SMEs score them as “poor” and 27% as “very poor”, lower than public sector and large employers for money left at the end of the month, savings, redundancy pay, sick pay and pensions.
According to the Federation of Small Businesses, SMEs account for three fifths of employees in the private sector.
Sarah Coles, head of personal finance, Hargreaves Lansdown, said that while there are benefits to working for smaller firms, financial rewards aren’t among them.
Coles said: “In the past year, the impact of the squeeze on public sector workers has been clear. Pay rises have lagged those in the private sector, and industrial action has been widespread. However, what has been less obvious is that people working for SMEs have tended to be even worse off in most areas of their finances.”
Working for a smaller business tends to mean you’re paid less, Coles noted, with the average household income of a home headed by an SME worker is £38,804 – compared to £44,189 for the public sector and £47,990 for those working for larger companies.
This is one important reason why just 43% have enough cash left at the end of the month – compared to 46% in the public sector and 55% among those working for big companies.
Monthly surplus income for those working for smaller companies averages just £155 – behind the public sector at £214 and large companies at £324.
Coles said: “It’s one reason why only 65% of those working for smaller businesses have been able to build up enough emergency savings – to cover at least three months’ worth of essential expenses. That’s behind the public sector at 75% and large companies at 76%.
She added: “However, this is only part of the picture, because they fall short on the vast majority of employee benefits too. Redundancy pay is best in the public sector, while life insurance, critical illness cover and sick pay is strongest among larger employers. SMEs score worst in almost every area – especially pensions. It highlights the vital support provided by bigger organisations, and just how vulnerable people are without it.”
Pensions are a key workplace benefit in which SMEs lag behind their larger counterparts, with employees at larger firms enjoying more generous employee benefits packages.
Helen Morrissey, head of retirement analysis, Hargreaves Lansdown, said that the data showed a clear divide not so much between public and private but around the size of employer.
She said: “Households where the main person works for a large private sector employer do lag pension-wise, but not by as much as you might think, with 55% in line to retire with a moderate retirement income. The real struggle comes for those working for smaller private sector companies, with just 35% on track.”
