SME productivity at pre-pandemic levels after labor costs rise 23%

In particular, according to the Cepyme indicator “State of SMEs” corresponding to the second quarter of this year, productivity SME It fell 2.3% year-on-year in the second quarter of the year, adding six straight quarters of decline and still 1.7% lower than the same period in 2019.

The business organization under the leadership of Gerardo Cuerva explains these figures, which also represent a blow to the competitiveness of companies, by increasing costs with specific characteristics. Overall SME costs remained stable, mainly due to downward trend in prices for energy resources and intermediate productsalthough growth in previous years means it is 22% above the level recorded in the second quarter of 2019.

In this sense, labor costs continued to put upward pressure on the costs of small and medium-sized companies, although they fell by three-tenths compared to the first quarter of the year, they increased by 4.5% between April and June. This increase corresponds to a 3.9% increase in the regular average salary and 5.4% for other expenses

labor, including quotes social

moderation of labor costs This comes after ten consecutive quarters of at least 5% year-on-year growth, which however contrasts with the average growth rate of 0.3% in the decade before the pandemic. For this reason, Sepim asks that the situation of Spanish SMEs be taken into account “when taking measures that entail a new increase in costs, which further impairs their productivity.”

As the Director for Economics and Industry Policy of the Confederation noted, Francisco Vidal, During the presentation of the study, these labor costs, quantified between wages and other components of social contributions, must also be added to the costs that arise from the strict regulation approved by the Government in recent years. “Small companies have a much harder time adapting to regulations than larger companies,” he explained as another burden on businesses that is cutting into their profits, noting that it is a “regulatory avalanche.” In this sense, he noted that while companies with one and two employees destroy jobs, large companies create them at the rate of 8%.

Greater impact on mid-sized companies

Depending on the size of the company, the loss performance in the second quarter this was more pronounced in the case of medium-sized companies (-3.1%) what’s in small (-1.9%)although in the latter the worsening of this indicator results in 18 months of decline, compared with 15 months for medians.

Thus, low productivity is one of the main problems of small and medium-sized companies and affects the profitability of these companies

however, gross margin per employee remains 2.6% below pre-pandemic levels.

In relation to salesSMEs showed growth of 4.9% year-on-year, although Cepyme believes that it is not yet possible to talk about a “change in trend”. This growth was more pronounced in small companies (5.2%) than in medium companies (4.3%), although for small companies it remains slightly below the levels recorded at the end of 2019, before the pandemic. However, after adjusting for inflation, SME sales growth stands at 2.7% year-on-year, representing two consecutive quarters of year-on-year sales increases.

More labor costs but more employment

On the other hand, labor costs (+4.5%) were higher in small companies than in medium-sized companies, increasing by 4.7% and 3.9%, respectively. Cumulative growth since the first quarter of 2021 is 23.1% for small companies and 16.9% for medium companies.

At Cepyme, they attribute the largest increase in labor costs in small companies to an increase in Interprofessional Minimum Wage (IWM)the impact of which is “proportionately greater in smaller companies because their average pay, given their lower relative productivity, is also lower.”

He Employment in SMEs increased by 2.9% in the second quarter at an annual pace of more than 9.3 million employees, the highest spread in the past seven quarters. By company size, smaller companies saw annual employee growth of 1.9% in the second quarter, the most moderate since 2022, reaching 6.49 million workers. In turn, employment in mid-market companies grew by 5.3%, the biggest increase since September 2022, reaching 2.87 million.

However, Cepyme warns that this employment growth, exceeding sales growth, increases labor costs per unit sold and negatively affects performanceespecially in the case of smaller companies, and their ability to make new investments or create more jobs.

Destroying 5,000 small businesses in five years

The number of small businesses with employees grew 0.4% year over year in the second quarter, the smallest increase in four quarters. the number of medium-sized companies increased by 4.5%which is the largest increase since September 2022.

However, small cap volume was down 0.4% from the second quarter of 2019, while midcap volume was up 10.5%. In absolute terms, there are 5,100 fewer small companies than in the second quarter of 2019, and 2,700 more medium-sized companies. Total balance shows 2,400 SMEs with fewer employees than five years ago.

Regarding financing, interest rate The average SME wage was 4.81%, slightly lower than the previous quarter (4.91%), but 3.2 percentage points higher than two years ago. Thus, between April and June, SMEs received new bank loans amounting to 43.6 billion euros, eliminating the effect of inflation. Of these new loans, €33.5 billion went to small companies (+6.2% year-on-year) and €10.1 billion to medium-sized companies (+8.3%).