According to the Federation of Small Businesses (FSB), labour costs have been cited by four in ten small firms as their main barrier to growth.
The government has been urged by the FSB to consider introducing new measures that would help small firms manage costs without having to cut jobs.
The Office for National Statistics (ONS) has revealed that the number of workers on UK payrolls fell by around 612,000 between March and May.
Large sections of the UK economy were shut for around six weeks from 23 March and these estimates from the ONS reflect the impact that has had.
However, economists have suggested that the full effect on employment will not be felt until after the furlough scheme ends on 31 October 2020.
Mike Cherry, Chairman at the FSB, said:
"The government should take a holistic approach to job market interventions, no single new policy will be enough.
"A reduction in employer National Insurance Contributions (NICs), or further uprating of the targeted employment allowance, combined with a widening of NICs holidays, would be a good place to start."
It is thought that any new measures aimed at reducing pressure on the costs of small businesses may be revealed in a fiscal announcement in early July.
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