The gap between those in corporate and public sector jobs and those who are self employed or work in SMEs is growing ever wider

Despite claims to be champions of growth, the government is creating working cultures that are anything but and appear to be doing so at the behest of an increasingly privileged nomenklatura.

For some time now there has been a widening gap between those who are fortunate to work in large corporates or large public sector organisations and those who are self employed or work within Small to Medium Enterprises (SMES) which are defined as organisations under 250 employees. This is creating a two tier employment landscape as the obsessions of the former are increasingly those of the pampered and privileged whilst the latter are burdened by increasing legislation, red tape and unrealistic expectations that radically shift the competition balance towards large businesses. 

When I grew up the really wealthy kids had parents who owned carpet warehouses or car dealerships. Those who took the initiative to start their own enterprises and risked all to do so and that these businesses succeeded pre Thatcher at a time of economic woe, is a testament to the men and women who founded and ran them. During the 1990s the most highly paid moved to the bankers, especially the investment ones. This group of people had been well paid in the past but not to the level of the successful entrepreneur. By the late 1990s salaries in the millions were not unusual for contemporaries of mine in their late 20s who had chosen a city job. 

Recently we have seen the emergence of another highly paid class of workers, the public sector executives. A ballooning bureaucracy has emerged, which, like all bureaucracies, is started with a specific remit but becomes self perpetuating and requires feeding with constant regulation - regulation that is squeezed out of the SME and private sector. Unless it is consciously pruned, such bureaucracies inevitably crush the societies they were built to serve. We have seen this in the past, in the Byzantine and Chinese Empires, in post partition India and in France - the UK used to be very good at nimbly avoiding this pitfall but it seems eventually our feet have been shackled by the chains of  self interest packaged as ‘progress’. The Tories scandalously failed to deliver on the opportunity Brexit offered to cut these weeds back, a failure that I suspect historians will eventually conclude as to why they lost the 2024 election, under Labour, a party that exists to serve the new nomenklatura it may now be impossible to reverse the slow strangulation of enterprise.

When I was considering my career options back in the late 1980s, the Civil Service and public sector were seen as safe bets where, although you wouldn’t get paid as much as in the private sector, you would get job security and a great pension. That was the deal. Yet in 2024 we have a Civil Service where not only are salaries on average 11% higher than those in the private sector but they still get great pensions. In short, the Civil Service and other Public Sector employers are now the destinations for the aspirational, and who can blame them?

Because it is not merely in pay and pensions, those who work in the public sector and in large corporates are pampered in ways that those in SMEs cannot imagine. Take my word for it, in the last 10 years I have worked for both large public sector employers, FTSE listed corporates, start ups and small businesses. I work in HR and I am in a prime position to observe this in real time. 

My last corporate job came with an extraordinary benefits package, not only did we have good pay, a bonus and a secret leading pension. We had: 30 days leave, top class private health insurance and dental for our families, a car allowance, a ride to work scheme, a travel pass loan, a card that gave us huge discounts across retailers and other services (Blue Light Card), education loans and grants, access to GPs and mental health helplines, death in service benefit and critical illness income protection. On top of this we had an HR team that enforced 37.5 hour weeks, and woe betide any manager who ignored that. Working from home was pretty much universal for executives and enhanced paternity, maternity and sick leave were standard. 

Many of my colleagues were hard working and passionate about their jobs and our employer, but it is a principle well known that 80% of the work in any organisation is delivered by 20% of workers. Like any human organisation, we had our skivvers, our passengers and our scoundrels who approached their salary and benefits as a right rather than a privilege. Sometimes it was like wading through treacle trying to get anything done simply because of the laziness and indifference of a proportion of workers. Attempts to ‘encourage participation’ - to even meet the basic standards of delivery to a job specification were cynically deflected with ‘mental health’ or ‘stress’ complaints which effectively cushioned the chancer from the consequences and which invariably resulted in their exasperated manager being investigated for bullying. 

My experience here was not unique. I speak regularly with managers from all sectors and the story is the same, an upside down world where employees are able to play ‘victim’ cards if they can’t be bothered to do their jobs and any disciplining invariably results in their managers being painted as villains and results in major stress.

I can recall one experience I had where a senior worker who commissioned agency workers was found to be corrupt, routing business to an agency owned by a relative whilst tearing up agency supplier agreements with our established and trusted supply chain. So serious was this we called in the police and there was evidence to press charges. However, victimhood and stress cards were played, the charges were dropped and the disciplinary action limited to a mild slap on the wrists. Meanwhile I had to rebuild the relationships with the long suffering supply chain who had to be talked out of taking legal action against us for breach of contract. I was also ‘spoken to’ by a director for being ‘too aggressive’ in my investigation - I was following protocol to the letter. The result, 3 years on the individual in question is till working there, I am not, increasingly disillusioned by a culture where if you acted in the best interests of the organisaiton it was you who were condemned and treated with suspicion. 

I bet that none of this is news to readers. Afterall the culture in our institutions is simply a reflection of the broader national culture and at present in the United Kingdom this is bordering on Anarcho Tyranny where law abiding citizens are subjected to increasingly heavy handed state interference bordering on persecution and criminals are petted and pampered. None of us should be surprised to encounter this in your workplace.

So back to this gap - very very few small businesses are able to either offer the packages that large employers are and hiring a bad apple can be existential for such businesses. With the increasing burden of taxation, and crushed under red tape why would anyone risk their homes and family security to set up an enterprise, no matter how good their ideas?

Meanwhile those in the nomenklatura class are now pursuing their next demands - paternity leave rights mandated in law, there’s currently a petition online about this and it’s being touted by all and sundry on Linkedin. Now I am a father, I was self employed when my kids were born, would I have wanted to spend time with them, would I have appreciated paid leave to allow me to recover from the utter exhaustion of a newborn and a young family? Absolutely. My daughter was late which means the time I had booked off, unpaid leave as all is when self employed, was up when she was born, I was back at work 400 miles from home within 48 hours of her birth. It was a horrendous situation but we dealt with it because we had to. Reading the demands of the petition, and I won’t include a link here because I don’t want to encourage a pile on, those making these demands almost certainly work for large employers because those demands, when applied to a small business are wholly unrealistic. That they make such demands in a ‘ZERO TOLERANCE’ way is as depressing as it is predictable. 

Just before I was about to publish this, my colleague, Steve Chilcott sent me a link to this article by Alan Price of Peninsula Business Services, a large HR Consultancy that services SMEs. In it Alan is essentially demanding that UK SMEs which are exempted from Labour’s new rules about menopause in the workplace should ‘keep up or get left behind’. It is extremely disappointing that Alan, who is meant to represent his customers and act in their best interests, has decided to essentially insist that they ‘keep up’ despite a rare instance where they have been exempt. Alan quotes the World Economic Forum’s controversial claim:

“Although this report is based on larger companies with executive boards, according to the World Economic Forum, female leaders have a huge social-economic impact on smaller businesses too. The report found women-led businesses drive job creation, spark innovation and even contribute to greener, more sustainable companies. “

The article quoted is a word salad of Equality Diversity and Inclusion social outcomes and doesn’t actually cite any actual productivity or commercial results to support the claim. 

Whilst acknowledging that implementation of the new rules surrounding menopause in the workplace will be harder for SMEs to implement due to lack of resources and staff cover, his suggestions for ‘keeping up’ amount to two sentences around flexible working, training and development and weirdly ‘keeping  up with legal developments’ form government - despite the government having exempted SMEs.

It is disappointing that a senior manager in an organisation which is ostensibly there to support SMEs is clearly so removed from the reality of running an SME himself, let alone the airtime that HR Zone has given him for this article. 

I work with a lot of SMEs and even if they wanted to bring in such menopause initiatives and paternity leave rules, the reality is they cannot afford to. With 62% of all working people working in SMEs making demands like this without considering  the impact on small businesses is indicative of the bubble of luxury many public sector and corporate workers exist in. They are so detached from the financial realities faced by SMEs and workers within those businesses that when you patiently explain the challenge these would face should their demands be made law by a government obsessed with micro managing us, you might as well be speaking ancient Mongolian to them, they look at you blankly before repeating their demands.

So why is this important? Well, as I already mentioned, there is an increasingly worrying burden of red tape in the business world. Regulations and red tape are necessary to maintain safety, workers’ and consumer rights but unless constantly reviewed by government, it grows and it grows. It is in the interests of large businesses to lobby for regulation and red tape because they have the resources and in house staff to cope with it. Small  businesses do not, and this shifts the commercial competitive advantage massively over to the larger business. 

Here’s an example: about 10 years ago the EU Commission was lobbied by the vast German publisher sector to introduce VAT on digital publications, which, until that time had been exempt - furthermore, they demanded that the new rules applied to the smallest of internet creators and that each of them must complete a separate VAT return for every EU country they sold into, no matter how small the customer base. At the time I published a small digital sailing magazine which had a readership of around 20,000, thankfully mostly based in the Americas and Australia, I did have some European customers, around 500, scattered across an dozen nations. I calculated that if this law was brought in I would be spending 80% of my time every month competing VAT returns for each of those countries. At this point I wrote to both my MP and my MEP and joined a campaigning group of other small publishers. Despite securing a debate in the House of Commons where there was unanimous agreement across the parties that this was grossly unfair and a blatant attempt to drive small publishers out of the European marketplace, the MPs were limited to lodging their objections with the EC - a debate in the European Parliament concluded the same and lodged their objections. Job done? No, because the EC wasn’t obliged to listen to either so they introduced the law anyway to hoots of celebration from the German publishers and wails of despair from the thousands of small publishers. Incidentally, this was the event that woke me up to the reality of EU ‘democracy’ - that a lobbying company could effectively demand an unelected Commissioner draft a law which the so called European Parliament, let alone national member parliaments, had no right or method to stop and would be impossible to appeal. What did I do? Well I simply gave the product away to my European readers and entered 0 VAT returns. Costing me around £5k per month. 1/5th of my revenue. 

It’s not all bad news, Parliaments understand that SMEs have a huge disadvantage so go out of their way to protect them from irrelevant red tape. However, procurement rules in the private and public sector often ignore these exemptions. 

Take Modern Slavery. Since Cameron’s Government any business turning over £36million or more has to, by law, have a Modern Slavery Policy and train managers how to spot conditions where slavery may exist in their supply chain and elsewhere. The reason why small businesses are exempt from this is that most do not purchase supplies and raw materials directly from overseas and instead purchase through supply chains based in the UK. In other words it is superfluous. 

Yet despite this Cabinet Office Procurement rules demand, de facto, that you have such a policy if you wish to supply to the public sector like an NHS Trust. Technically they can’t demand this as you have no legal obligation to have such a policy but the reality is that you have to fill out a digital questionnaire which has no option for exemption, you can explain in the notes that you do not need this but in order to make it through to the next stage of tendering you have to get a certain score from this document. Those who have a policy are waived through, those who do not are meant to be checked for exemption, but they are usually not, indifferent public sector procurement administrators will more often than not just bin your application. The result is that the law isn’t protecting SMEs from this burden because the Cabinet Office effectively cannot be bothered to implement a system that is inclusive of SME suppliers. 

So SMEs wishing to supply go through the expense in time and money of implementing a policy they do not require and makes no sense and which they are meant to be legally exempt from having. 

Another example of how utterly out of touch the public sector and corporate world is about the realities of life in small business suppliers is around Equality Diversity and Inclusion. You want to sell paperclips to an NHS Trust? Well you’d better have an EDI policy and also have trained your managers and people in EDI. This is already pretty much universal but Labour want to make it legally mandatory. 

What’s the big deal? Well at a time when the Corporate world is winding back on the more radical and intrusive EDI in their own organisations, they continue to impose it on suppliers through procurement rules. Rules for thee but not for me! Some of this is because the Procurement Departments have not yet caught up with the implications of unlawful EDI but much of it seems to be essentially indifference. They don’t appear to care that they are burdening their suppliers with more red tape and costs. 

It’s much worse in the Public Sector, one of our clients is a supplier into the NHS. They recently won a major contract. Just before the contract was due to be signed, the Director of Procurement at the NHS Trust contacted my client and informed them that their new supplier EDI policy didn’t just require their business to have an EDI policy and training but insisted that the supplier sent three senior managers to the NHS Trust for a 3 day onsite EDI training course. 

I don’t think I have ever come across a better example of how wide the gap is between those working in the public sector and the reality of running a small business. Never mind the inappropriateness of insisting that you send your managers to them for what is a highly politicised training course, but that 3 of your senior management team in a business employing 50, travel 200 miles across the  country, are put up at the supplier’s expense in hotels and then lose 9 working days in total (not including travel time) out of the business. Whoever came up with this one up has no idea whatsoever of the pressures, budgets and realities of running a small business and of course, such demands again shift the balance of competition to large companies who can afford to dance to this tune. 

SMEs are increasingly at a disadvantage, the rewards for setting up a business, for taking the risk for enterprise are increasingly not stacking up against the risks. The gap between the stress and demands of running a business and, indeed working as an employee in one, are a fraction of the cushy life many, but not all, experience in the public sector or corporate world. Our government boasts that it will encourage growth. Excuse me if I call bovine excrement. The best way they could encourage growth is to reverse their intentions to introduce more red tape especially through the drafts of their new Employment Laws which are already slowing down recruitment and will slow growth and contract the sector. Furthermore, they could make an effort to ensure that their own Cabinet Office procurement function honoured the law which protects SMEs from the costs and burden of excessive unnecessary paperwork and regulation. 

I won’t hold my breath. 

We are rapidly spiralling into a two tier nation, across society rules are not evenly applied. Even before the Labour government got in we had a situation where working reality for the privileged nomenklatura was slippers and the kitchen table with a laptop whilst those less fortunate were delivering, fixing and keeping the show on the road. The much vaunted junior doctor pay rise is predictably not enough as the ‘Registrars’ as we must now call them are demanding more, any semblance of duty to the NHS and patients out the window, any understanding that their massively subsidised education was part of the deal, the American doctors they so frequently equate themselves with saddle themselves with vast debts to fund their education. I suspect the public, especially those eking out a living in SMEs will start to lose patience and sympathy for an increasingly entitled class which will further spread division and resentment across a society that desperately needs unity and the restoration of the concept of duty in return for rights. 

People will tolerate a lot, however they will not tolerate unfairness and injustice. The government, public sector and large corporations would be well advised to consider how they can honour their part of the procurement deal with SMEs because that is the key to both growth but restoring some semblance of an even playing field. If they continue in this way, at some point, there will not be any more money to fund gold plated paternity leave or 22% pay rises.