As we are now nearly halfway through 2026, it is time for businesses to take stock of where things stand in what has been an incredibly tumultuous time for the economy.
From conflict in the Middle East to the dawn of the first trillionaire, 2026 will be legendary for the way in which it has reshaped global economics.
UK businesses are feeling the pressure of those forces more domestically, alongside the growing scale of the Employment Rights Act.
Is it possible for businesses to fulfil their legal duties, keep employees happy and handle the current economic climate?
Pressures from both sides
UK SMEs are in the unfortunate position of feeling squeezed from two different sides.
On the one hand, they are being subject to the battering that affects most businesses and individuals in the UK following the outbreak of conflict in the Middle East.
Spikes in energy costs and disrupted supply chains may not fully abate even if the ink dries on a peace deal between the parties directly involved.
On the other hand, those same forces are contributing to an ongoing cost-of-living crisis that is seeing employees view managers and bosses with increasing levels of contempt.
Since the 2008 financial crisis, wages have broadly stagnated in terms of their real-world value, even as the figure on paper has increased.
In fact, the increase in the National Living Wage (NLW) and National Minimum Wage (NMW) has seemingly not had the impact the Government may have intended.
Believing that a rising tide lifts all boats, the NLW should have pushed up other wages, but research has consistently shown that the gap between minimum wage and graduate salary has fallen significantly and that many graduates are not even earning more than the bare minimum.
Acting your wage in the jobpocalypse
Employers have found rising employment costs, complicated by the changes to employer National Insurance Contributions (NICs), challenging to manage.
This struggle may be attracting little sympathy from the employees who feel disenfranchised by the disconnect between rising inflation and bills and the stagnation of wages.
So it has emerged that more people are ‘acting their wage’, a work ethic popularised on social media wherein an employee does the level of work they feel their salary matches.
This is different, though connected, to quiet quitting, where an employee wants to leave a job but cannot for fear of destitution, but can have a similar impact on the workplace.
Workplace culture can suffer when employees feel undervalued and adopt coping strategies rather than commit to career progression and growth.
Alongside this, the decline in the job market due to the rise of AI and the economic challenges faced by businesses is being coined the ‘jobpocalypse’.
Employers who are looking to recruit may find that they have a greater choice of candidates as the unemployment rate sits at five per cent.
However, the jobpocalypse may make people stay in jobs that they do not like for longer, as they no longer have the capacity to switch to a career that better suits their interests and talents.
This could see employers and employees collide as quiet quitting and acting your wage both take valuable resources away from hiring employees that would be more passionate, but employers lack the ability to provide additional compensation to combat the problem.
Employment law vs financial reality
Concerns around staff morale and compensation may worsen with the broadening scope of the Employment Rights Act.
Trade unions are due to have a resurgence and the clamping down on unfair dismissal may make it more challenging to move along employees who have quiet quit.
The Gender Pay Gap will also need to be addressed, so any endeavours to increase wages will need to be managed with that objective in mind.
Despite the law changing, the financial reality for many businesses remains stubbornly the same.
At this point, seeking professional accounting support is vital for businesses looking to address these conflicting concerns.
Our expert accounting team can help to review your financial position to empower you to make choices that suit your employees and your business.
There are other ways of compensating teams, such as benefits or salary sacrifice schemes, that can help to boost morale without placing as severe a drain on your accounts.
Where a pay rise is required, we can help to review your budget and financial forecasts to ensure that it will not harm the business in the long run.
Our team can also advise on operating tax efficiently, saving some money on unnecessarily high tax bills, as well as providing access to grants and other funding opportunities.
With the Employment Rights Act placing a greater focus on supporting employees, understanding the financial realities behind your business is essential for maintaining compliance.
Speak to our team for expert support in tackling your business’s current financial challenges.
