Every time a new fiscal statement appears on the horizon, UK business owners feel the same knot in their stomach. Will National Insurance go up again? What about minimum wage? Pension contributions? The direction of travel is clear: employing people is getting more expensive.
The question isn’t whether labour costs will rise. It’s what you are going to do about it.
For many SMEs, the first instinct is to freeze hiring, stretch existing teams and quietly hope things stabilise. In practice, this simply leads to burnout, bottlenecks and declining service. A smarter response is to treat rising employment costs as the nudge you needed to modernise how work gets done.
There are three big levers most organisations underuse: automation, workflow redesign and better self-service for customers and staff.
Start with automation. This doesn’t mean replacing people with robots. It means deliberately removing low-value, repetitive tasks from people’s plates. AI tools and no-code platforms now make it realistic for non-technical teams to automate everything from invoice processing to onboarding emails.
Take a typical back office. Someone downloads reports from one system, copies data into a spreadsheet, runs a few formulas, then pastes a chart into a slide deck. That’s 1–2 hours a week of fairly mind-numbing work. With off-the-shelf automation tools and AI, you can have a bot pull the data, generate the chart and draft commentary, leaving a human to spend ten minutes checking and tweaking.
Multiply that across finance, HR and operations and you can claw back dozens of hours a month without a single redundancy.
Next, look at workflow redesign. Rising labour costs are a powerful incentive to stop doing things “because we always have”. Where do approvals pile up? Which processes still assume paper forms or wet signatures? Where are handovers messy because data is scattered across systems?
Map your most painful workflows end-to-end and ask one question at each step: does this really need a person, or could a system handle it? Often the answer is somewhere in the middle: you can centralise information, tighten triggers and use AI for triage, leaving humans to make the genuinely judgement-based calls.
Self-service is the third lever. Customers increasingly expect to do simple things themselves: change bookings, update details, check status, download documents. Every email or phone call for these basic tasks is a cost that could be avoided. Building simple portals, FAQs, and guided flows can dramatically reduce inbound volume.
The same is true internally. Can staff reset their own passwords, update bank details, request holiday and access basic policies without raising tickets? If not, you are paying a hidden tax on clunky systems.
Of course, technology is not free. Automations, AI tools and better platforms come with licence fees and implementation costs. The key is to compare those against the structural increases in labour costs you know are coming. If a modest investment in automation means you can grow revenue 20–30% without adding headcount, it quickly pays for itself.
To make this real before the next Budget, try a focused sprint. Identify three processes where your team spends painful amounts of time. For each, set a simple goal such as “halve manual effort within 90 days”. Then pull together a small cross-functional group – someone who runs the process, someone with tech know-how, and a decision-maker – and give them permission to simplify aggressively.
Crucially, involve staff in designing the new way of working. If automation is done “to” people, they will understandably worry about their jobs. If it’s done “with” them, most will happily offload the boring bits so they can focus on higher-value work.
Rising employment costs are not going away. You can either absorb them through lower margins and higher stress, or you can use them as a catalyst to build a leaner, more resilient operation. The Budget will say what it says. Your leverage lies in how effectively you modernise your business in response.
