Employees of UK small businesses are working an average of eight extra hours unpaid every week at work and home - worth £1.6bn* to the UK’s SMEs - according to new research** from Paymentsense, Europe’s leading card payment supplier. Worryingly, 16% of those surveyed work even more hours, with younger workers (aged 18-24) averaging 11 extra unpaid hours every week.

The main reason for SME workers doing so many extra hours is to keep up with the volume of work (58%), followed by pressure from their manager (30%) and, more positively, 28% wanting the business to do well. However, this is leading to nearly half of people (42%) feeling more stressed, and over a third (37%) feeling taken for granted by their employer.

Managers might take note that 36% of SME staff said they rarely, or never, got credit from their bosses for putting in the extra hours. What’s more, almost a third of them (29%) have considered leaving for another job or changing career completely as a result of the frequent unpaid overtime. A further quarter (26%) would consider starting their own business, or going freelance (16%), to escape their current roles.

Clare Dimond, a leading business coach and author of 'Free Choice' said: “With a smaller number of staff, the contribution of every employee in an SME is critical. Employers that value the time, creativity and mental clarity of each individual will see the impact on their bottom line and staff retention rates.

“Directors can role model good mental health behaviour for their teams. Avoiding stressful thinking, spending time exercising or with family and creating a culture of strong relationships, and individual contributions, make for a healthy, inspired career and home life.”

Guy Moreve, Head of Marketing at Paymentsense commented: “We know from working with over 50,000 of the UK’s small businesses that SMEs are constantly challenged to balance the often-unpredictable demands of growth, with looking after hardworking staff - especially in potentially uncertain economic times.

“Keeping employees happy should be a priority, given its impact on productivity levels. The good news is that perks don’t have to cost a fortune. Our own research has shown that an early Friday finish, the chance to work flexible hours, and a free day off here and there: for birthdays, duvet days or to help with moving house are the amongst most sought-after benefits.” 

‘Can you just…?’ Top 8 reasons SME staff work late unexpectedly

1. Last minute request from client or customer (39%)
2. Last minute request from boss (37%)
3. Meetings overrunning at the end of the day (34%)
4. Keeping up with admin (32%)
5. Attending meetings at client or customer locations (24%)
6. Equipment or computers playing up (21%)
7. Manager’s poor time management (20%)
8. Their own poor time management (19%)

* Average UK salary of c.£27K, equal to around £104 per day (average of 260 working days per annum). 15.7m UK SME workers according to FSB figures.

** Research undertaken from July 4-5, 2017 amongst 1,000 UK SME employees.

(Source: Paymentsense)

According to Ismail Ertürk of the Alliance Manchester Business School at The University of Manchester, banks and regulators are mis-selling the free banking argument, implying that consumers should not have to pay for the outdated technologies of banks and prop up their ill-designed profit models. Here, Ismail introduces Finance Monthly to a history of banking regulation and potential solutions that exist in eliminating this consumer-bank barrier.

Before the global wave of deregulation and liberalisation of banking industry and products since the early 1980s a typical commercial bank would earn its profits mainly from credit intermediation- collecting deposits from public at low cost and lending these to borrowers at a high margin. The name of the game was: 3-6-3 (borrow at 3% lend at 6% and go to play golf at 3pm). The well-meant but badly realised deregulation and liberalisation reduced net interest margins in banking to very low levels forcing banks to search for business models to increase fee income by selling financial products ranging from insurance to asset management. Around this time, a new global bank regulation called Basel Capital Adequacy Accord came into effect too shifting the focus in bank financial performance measurement from net interest margin and return on assets to return on equity. Stock markets started to use return on equity as the key financial performance metric to value banks. Fee generating businesses including securitisation of loans- like sub-prime loans that caused the financial crisis of 2008- do not require capital under Basel risk algorithm and make it easier for banks to achieve high return on equity targets.

Such historical understanding of bank business models and the role of net interest income in bank valuation by investors is very important because today's discussion about free banking being detrimental to bank profitability cannot be sensibly made without understanding how we arrived here. Currently with banks in the UK and Wells Fargo in the US paying substantial amount of fines for mis-selling products to their financially illiterate customers it is absurd to argue that bank retail customers have been enjoying free banking. Banks have been using free deposit products as a bait to charge all sorts of unjustified fees and commissions to their customers from mis-selling borrowing related insurance products to overcharging for overdrafts. Therefore, the argument that banks provide free banking for deposit customers needs to be factually supported. The issue could be that banks are under pressure from stock market investors to achieve unrealistic return on equity targets under the current low interest rate environment and therefore are looking for ways to overcharge their retail customers. Regulators should first fully understand this shareholder value-driven bank business model before supporting banks for the end of so called “free banking”, which really is more like banks asking for a licence to overcharge consumers.

At a time when developments in digital technologies make electronic payments almost costless and globally available 24 hours the demands by banks, regulators and international official institutions like IMF for uncontrolled charges for payments in the name of ending the sol-called free banking look unjustified and not supported by facts.

What we need is not the end of so-called “free-banking” but a new non-bank shared public technological infrastructure fit for purpose for our digital times for payments. The cost of this infrastructure should be met by a public body that recoups its costs from banks and other users. With big data analytics, it should not be difficult to do maths for transparent costing and pricing under such system. Therefore, ending the “free banking” is a false debate that is likely to support outdated bank IT infrastructure and bank business models that promise to the stock market unrealistic return on equity targets. With the developments in payment technologies the regulators should creatively think a payments infrastructure that is run in the interest of consumers of retail financial services. In addition, regulators should scrutinise shareholder value-based bank business models and ask justifications for profitability targets that banks promise to their investors. It is time to reshape banking radically to introduce digital technological developments in payments for fair pricing and economic efficiency. Consumers should not be paying for banks’ ill-designed and not fit for purpose business models.