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Many small firms avoid taking on new staff because of the company legislation and extra paperwork involved, an expert has said.
A spokesperson for the Federation of Small Businesses (FSB) recently explained that only four per cent of its members had made use of government-funded support to facilitate this sort of expansion.
He continued: "The amount of legislation that you encounter once you start employing people is quite high.
"A third of our members have told us that they are not taking on any employees because of the employment legislation."
The red tape and time consumed by government paperwork means the typical business start-up is loathe to get involved in more than they have to.
The spokesman commented: "Time is money and the problem we found was that the average small business spends 28 hours a month filling in forms for the government.
"Thats four working days where they are not going out and growing the business and creating more jobs - and that obviously puts a lot of people off."
According to the FSB, if every small business in Europe took on one extra member of staff, unemployment would be almost eradicated.
Figures from the organisation also indicate that almost half of small businesses use their bank overdraft to finance the wages of new employees.
Some 41.6 per cent of small company bosses used their own savings, 35.5 per cent used return profits, 30.2 per cent used a loan and an alarming 21.4 per cent used a credit card.
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