What has been the impact of COVID-19 on UK small businesses?

Research conducted among more than 1,000 small and medium sized business owners and decision-makers (SMEs), by employee benefits provider Unum shines a light on COVID-19 and its impact on the SME community.

Following the findings, Unum has called on policymakers to look at how SMEs that are new to health and wellbeing support can better help their employees in a post-pandemic world.

Key findings from Unum’s research include:

  • An increasingly challenging business environment: 41% of SMEs lost a large client or experienced adverse market conditions in 2021, up from 29% in 2019.
  • COVID-19 infection and sickness absence rates: 45% of SMEs said at least one of their staff contracted COVID-19, whilst 35% reported a staff member with long COVID (where COVID symptoms persist for at least 12 weeks)
  • Pandemic-hit companies note ‘critical’ business impact: 33% of SMEs reporting a COVID-19 diagnosis said long-term sickness absence had caused a ‘critical’ impact on company finances and business success, rising to 38% of SMEs reporting an employee diagnosed with long COVID.
  • COVID-19 and its impact on employees: 56% of SMEs feel that the pandemic has led to new work-related mental health risks among employees, while 43% said it had led to new work-related physical health risks.
  • Changing mindsets: 64% of SMEs feel they have a moral obligation to help their staff back to work after sickness absence, up from 50% in 2019, while 48% of SME owners say the pandemic will change how we handle workplace health forever.
  • Proactive companies experience positive results: 40% of SMEs who only did the basics when it came to employee wellbeing saw an employee leave the business due to ill health in 2021; this fell to 17% of SMEs who stated they go “well beyond” the legal requirements.

Simon Hodgson, Unum’s Head of Public Policy, commented: “In addition to the wider economic downturn caused by the pandemic, many of the SMEs surveyed were directly impacted by sickness absence, with 33% of surveyed businesses who had an employee diagnosed with COVID-19 reporting a critical or significant hit to their finances.

“Despite these challenges, there are reasons to be optimistic. There’s a growing appetite from SMEs to look after employees’ health and wellbeing. A Group Income Protection policy such as Unum’s that includes a full vocational rehabilitation service could be incredibly valuable for SMEs beyond providing vital insurance for their staff.

“Our exclusive research also highlights just what SMEs can achieve with a high-quality health and wellbeing offering. We found that SMEs with a proactive approach to managing sickness absence and went “well beyond legal requirements” were far less likely to have lost an employee for health reasons in the previous year compared to firms simply complying with the minimum statutory requirements.

“We want to see more SMEs and their employees benefit and call on policymakers to look at how businesses new to health and wellbeing support can best be helped to introduce support for their employees. Serving this huge and diverse market well is a must to provide employers and their employees with all the support they need in a post-pandemic world.”