New research shows that many SMEs may have been prevented from employing additional staff because of increased government regulation regarding employment rights and the entitlements due to staff.Data gathered by the Small Business Research Trust (SBRT) found that 58 per cent of small businesses said that employment regulations presented the most significant barriers to continued growth in their company.Nearly one in three (30 per cent) of the companies questioned said that they had compliance costs associated with employment regulation that exceeded £250 a week. Just under half had to pay between £50 and £150 weekly.Brian Wolfe, Chairman of the Small Business Research Trust criticised the government’s policies towards SMEs, saying: "The growth in sales of small and medium-sized enterprises has happened in spite of government."We can only wonder how much more small and private sector businesses would have grown, to the benefit of all, with a government that exercised more financial control in the public sector."The report also identified a worrying trend in employment. It found that in the final quarter of 2006 SMEs showed a fall in their levels of employment.Mark Berrisford-Smith, the chief economist at HSBC Bank, explained that small businesses continued to grow despite this fall in employment levels."Smaller firms enjoyed a modest expansion in their turnover in the final quarter of 2006. But with interest rates already on the way up it is no surprise that this was not translated into higher employment," he explained.© Adfero Ltd

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