Sage SME Monthly Workforce Pulse: March Update

The monthly Sage Workforce Pulse is based on data collected each month from approximately 200,000 small businesses with millions of employees across the UK. This report, created in collaboration with Smart Data Foundry and Cebr, looks into how Small and Medium-sized Businesses (SMB) are managing workforce challenges.

Key highlights:

• Median gross earnings: £2,186, up 4.9% year-on-year
• Median take-home pay: £1,778, up 3.9% year-on-year
• Total headcount: up by 0.3% on a year-on-year basis

As quoted in the report:

The UK’s growth outlook has been downgraded, reflecting the wider economic effects of conflict in the Middle East. Cebr now forecasts GDP growth of 0.8% this year, down from a previous estimate of 1.1%. A resurgence of inflationary pressures linked to higher global energy prices is expected to increase costs for small businesses while also delaying anticipated cuts to interest rates.

In the labour market, firms are likely to benefit from easing wage growth and a relatively large pool of jobseekers, with the unemployment rate at a five year high. However, ongoing international uncertainty combined with April’s minimum wage increases is likely to reinforce caution among employers, further constraining hiring momentum in the near term. 

For workers, rising inflation alongside slowing nominal pay growth is expected to place renewed pressure on real wages in the coming months. Notably, workers’ ability to negotiate higher pay is more limited compared with the previous inflationary episode, driven by the 2022 energy shock, when the labour market was in a much stronger position.

Liam Daly, Senior Economist at Cebr

Insights

Earnings

Median gross earnings rose 4.9% year-on-year in March across the UK, up from 4.7% in February but down from 5.8% in March 2025. Meanwhile median take-home pay (net) stood at £1,778, up 3.9% year-on-year.

The North East, the South East and London exhibited the lowest earnings growth in March, at 4.1%, 4.3% and 4.4% respectively, while earnings increased at the fastest annual rate again in Wales, rising by 5.8 %. Year-on-year changes in earnings growth varied more by industry than location. Earnings growth was highest in the ‘education sector’, rising 7.0% year-on-year, and lowest in the ‘arts and entertainment industry’, with annual growth of 1.6% year-on-year.

Headcount

In March, headcount among the sample of small businesses rose by 0.3% year-on-year, down slightly from 0.5% in February 2026. This decrease in headcount growth for small businesses mirrors the wider headcount trends across the UK where was a decrease in an approximate 11,000 (0.0%) people from February to March 2026.

The West Midlands, East Midlands and South East registered the greatest year-on-year increases, at 0.9%, 0.8%, and 0.5%, respectively. Meanwhile, the sample of small businesses located in Yorkshire and the Humber, Wales and London registered the greatest declines, with headcount falling by 0.2% and stagnating at 0.0% respectively.

Year-on-year changes in headcount varied widely by industry. Similar to this year’s previous results, ‘Accommodation and food services’ experienced the largest drop of 1.2%, while in ‘public administration and defence’ headcount grew by 4.4%.

Headcount growth was highest among micro businesses, which continued the increasing trend with an increase of 0.5%. While headcount increased by 0.3% among small enterprises and fell by 0.1% for medium enterprises.