Working out the true cost of hiring an employee in your business has, historically, been difficult to calculate.
A salary is easy, of course, but it is all the non-wage costs which are often elusive. Can you estimate how much tax will the employee cost you? What about the cost of sickness? Legal fees? Red tape?
A new report, published by the Centre for Economics and Business Research (CEBR) and the UK’s Federation of Small Business, has attempted to tackle the issue.
The actual amount an employee costs is interesting in itself. But even more interesting is the economies of scale that apply to employment: the first employee is the most expensive, and it gets cheaper and cheaper the more you hire.
The contrast between hiring just the one employee and hiring when you’re a larger company is striking.
On average, the index calculates, a business with one employee and one owner faces an average employment cost of £35,500 ($56,770) per worker. For a typical business in the 20-49 employee range, though, the cost is of £25,100 ($40,165) per worker. The difference between the two is close to a third less.