The cost of hiring your first employees

1. Purpose and status

1.This note records an interim review of reports received by the Team Council on the costs that arise when a small business hires its first employee. It applies the Founders Assembly’s five-part pattern test: Volume, Frequency, Consistency, Spread and Corroboration. It does not propose a standard, determine legal rights, or recommend a particular tax or contribution rate.

2.The question under review is whether the costs and administrative steps associated with hiring a first employee create a recurring obstacle to formal hiring by small employers. The Team Council’s proposed response, TM-001, is to examine lower and simpler employment costs for a business’s first ten hires, including phased social contributions, one-stop payroll registration and predictable rules. This note tests whether the evidence presently supports treating the issue as a sufficiently established pattern for further work.

3.As of 13 October 2026, the Team Council had 115 members from 38 countries and had received 167 reports from 43 countries. The median amount reported as at stake was approximately US$3,900. Thirty reports were recorded in the last 30 days. The figures describe the evidence recorded by the Council on the stated date; they are not estimates of the prevalence of hiring-cost barriers among all small businesses.

4.The finding is interim. Two tests meet the working thresholds set out below: Volume and Spread. Frequency, Consistency and Corroboration do not meet their thresholds on the evidence presently recorded. A test that is not met may reflect missing or insufficiently disaggregated information, rather than evidence that the underlying problem does not occur.

2. Method and working thresholds

5.The Council reviewed its report count and the accompanying aggregate information recorded on 13 October 2026. It considered the number of reports, the time information, the consistency of the reported situation, the countries represented and the scope of independent corroboration. The review uses only aggregate Council figures. It does not inspect or reproduce individual members’ identities or business names.

6.The five thresholds below are operational thresholds for this interim review, intended to make the finding transparent and repeatable. They are not presented as thresholds adopted by Assembly ballot, nor as statistical tests of population prevalence. The Council should retain them for comparison in a later review or state clearly if a future review changes them.

1. Volume. Threshold: at least 100 reports assigned to the issue. The count indicates whether a substantial body of reports is available for analysis; it does not, by itself, establish that each report is independent or representative.

2. Frequency. Threshold: at least 20 reports in each of three consecutive calendar months. This is intended to distinguish a sustained reporting pattern from a one-off concentration. A rolling 30-day count alone cannot establish the threshold.

3. Consistency. Threshold: at least 80 per cent of reports describe the same specific cost or administrative mechanism, based on a sufficiently detailed and comparable classification. A broad issue label is not enough to establish that different reports concern the same mechanism.

4. Spread. Threshold: reports originate in at least ten countries. This is a minimum geographic breadth test, not a claim that the issue has equal prevalence in each country or that country-level totals are comparable.

5. Corroboration. Threshold: at least two independent evidence lines, beyond the members’ reports, directly support the specific first-hire cost or administrative pattern under review. General evidence about employment costs or informality may provide context, but does not by itself establish that particular pattern.

7.Reports are treated as reports, not as verified cases or a count of unique affected businesses. Council records do not identify whether multiple reports may relate to the same business, whether all reports have been independently checked, or how reports are distributed among first-time and subsequent hires. Those limitations apply to the interpretation of all five tests.

3. Findings against the five tests

8.Volume — met. The Council had 167 reports recorded under hiring-costs, exceeding the working threshold of 100. This provides a sizeable body of member evidence for continued analysis. The number should not be read as 167 distinct employers or as a measure of the number of small businesses affected worldwide. Council records count reports by issue category, not unique businesses represented.

9.Frequency — not met. Thirty reports were recorded in the last 30 days. The threshold requires at least 20 reports in each of three consecutive calendar months. Council records contain no calendar-month counts for this review, and the rolling 30-day figure cannot be allocated between September and October or used to establish the required three-month run. The test is therefore not met on the present record. The 30-day count is a useful indicator of recent activity, but is not a substitute for a month-by-month series.

10.Consistency — not met. The Council’s situation classification records all 167 reports as “hiring-costs”. That is a broad category and does not indicate whether a report concerns employer social contributions, registration or payroll administration, insurance, a tax wedge, uncertainty about obligations, or another cost. Council records provide no breakdown by specific mechanism. Consequently, the Council cannot determine whether at least 80 per cent concern one comparable underlying mechanism. The uniform broad label is evidence of topic concentration, but is insufficient to pass the defined Consistency test.

11.Spread — met. Reports were recorded from 43 countries, exceeding the threshold of ten. The membership and reporting figures have different denominators: the Council had members from 38 countries, while reports were recorded from 43 countries. Council records do not explain that difference, and this note does not infer its cause. The country count supports geographic breadth in the reports received; it does not establish representativeness, comparable reporting rates or a regional distribution.

12.Corroboration — not met. External information provides relevant context, but the cited sources do not directly verify a common first-hire cost pattern in the countries or circumstances described by members. The OECD reports a 2025 average tax wedge of 35.1 per cent across OECD countries, with substantial differences among individual countries.[1] That measure concerns the tax wedge on labour; it is not a measure of the incremental cost of a first employee for a small employer. The ILO reports that MSMEs account for about 70 per cent of employment worldwide and that about 80 per cent operate in the informal economy.[2] Those figures establish the importance of MSMEs and informality, but do not establish that first-hire costs caused informality in the reports reviewed here. The threshold therefore remains unmet.

13.The overall result is two of five tests met. This supports continued evidence collection and analysis, not a conclusion that every reported cost is excessive, that a single policy response is suitable across jurisdictions, or that the proposed TM-001 measures have been shown to produce a particular employment outcome.

4. Evidence tables

14.The following tables present the aggregate figures recorded for the review. Where a requested disaggregation was not recorded, the table identifies it as not recorded rather than estimating or allocating the reports.

Table 1. Reports by country

15.The eight individually listed countries account for 101 reports. The remaining 66 reports are shown in one aggregate row because Council records do not list their country-level counts individually. Reports were recorded from 43 countries in total; the aggregate row is not a single country and does not indicate how many reports came from each of the other countries.

Table 2. Reports by region

16.Council records contain no region-level totals or regional classification of the full country list. Country names in Table 1 are not converted into regional totals here: doing so would leave the 66 reports in the aggregate row unallocated and could imply a complete regional picture where none is recorded.

Table 3. Reports by situation

17.“Hiring-costs” is the sole situation category in Council records. The classification does not distinguish the costs, steps or timing associated with a hire.

Table 4. Reports by team size of reporting business

18.Council records report these shares, which total 101 per cent, consistent with rounding. The figures describe the team-size categories reported in the Council’s aggregate data; there are no category-level report counts or cross-tabulations with country or cost mechanism. In particular, these data do not show how many reports concern a business making its first hire, as opposed to a business with existing employees.

Table 5. Reports by month or reporting period

19.The calendar-month rows indicate that monthly allocations were not recorded; they are not zero counts. The 30 reports in the last 30 days are a rolling-period figure and should not be added to the total, which already includes them.

5. Limitations

20.The report total is a count of submissions received by the Council. Council records do not establish the number of unique employers, the proportion of reports that have been verified, or the rate of reporting among all eligible businesses. Members choose whether to participate and report; the data are therefore not a probability sample of small employers. The country totals should not be compared as incidence rates because no country-level business population, membership denominator or reporting-rate adjustment is recorded.

21.The reports are grouped under a single broad situation label. Without consistent fields describing the particular cost, administrative action, jurisdiction, hiring stage and outcome, the Council cannot distinguish separate mechanisms or determine whether apparently similar reports are comparable. The reported median amount at stake of approximately US$3,900 is an aggregate summary only. Council records do not specify its calculation, the currencies or time periods underlying individual reports, or whether the amount refers to direct cost, expected cost or another measure. It should not be used as an estimate of the typical cost of a first hire.

22.The team-size distribution is also limited. “Just me” may indicate a business that has not yet hired, but Council records do not establish that every such report concerns a contemplated first hire. Conversely, the other team-size categories do not identify whether a business is hiring its first employee, adding another employee or reporting a general difficulty. A future evidence form should ask this question directly and separately from current team size.

23.External indicators require careful interpretation. OECD tax-wedge figures are country-level measures and do not isolate small employers or first hires. ILO estimates describe MSMEs and informality at a broad level; they do not identify the cause of informality in any individual report. Neither source should be presented as corroboration of a specific member’s account without evidence linking the source measure to the mechanism and setting in question. The cited context is relevant to the policy question, but is not a substitute for direct corroboration.

24.Finally, the thresholds in this note are screening rules rather than causal tests. Passing Volume and Spread establishes that a sufficient number of reports, across a minimum number of countries, is available for continued review. It does not establish the size of an effect, the best intervention or the likely consequences of a change in contributions or registration rules.

6. Next steps

25.The Council should retain the issue for further evidence gathering and improve the structure of incoming reports. The next collection should record, where the member is willing and able to provide it:

• the country and relevant jurisdiction, without requiring publication of the member’s identity or business name;
• whether the business is planning its first employee hire, has made that hire, or is adding to an existing team;
• the specific cost or administrative step involved, separating contributions, payroll registration, insurance, tax, professional assistance and other items;
• the amount, currency, period covered and whether it is paid, estimated or disputed;
• the point in the hiring process at which the cost or rule became a barrier, and the outcome, including whether the hire proceeded formally, was postponed or did not proceed; and
• the date of the event and whether a supporting document or independent source is available, with sensitive information removed.

26.For Frequency, the Secretariat should preserve a dated monthly series using a consistent reporting cut-off. The series should show new reports received in each calendar month and, where feasible, distinguish them from earlier reports updated or reclassified. This will permit a later assessment of the three-consecutive-month threshold without treating rolling periods as calendar months.

27.For Consistency, the Council should review reports against a published classification of specific mechanisms. The review should record uncertainty and allow more than one mechanism where a report concerns several costs. The current single “hiring-costs” label should not be treated as evidence that every report concerns the same underlying rule or expenditure.

28.For Corroboration, the Council should seek evidence that directly addresses the identified mechanisms, such as published rules, official contribution schedules, administrative process documentation or appropriately designed research on small-employer hiring decisions. Any such evidence should be assessed for jurisdiction, date, population and relevance to the first-hire question. General indicators may remain useful context, but should be reported separately from direct corroboration.

29.Regional summaries should be produced only after a complete country-level allocation and a stated regional classification are available. The Council should avoid extrapolating from the countries with the highest supplied counts or treating the unallocated remainder as geographically uniform.

30.A subsequent review should state its data cut-off, reproduce the same five thresholds or explain any approved revision, and report both the number of tests met and the reasons for any test not met. If new evidence changes the present result, the change should be documented rather than silently replacing this interim finding.

7. Conclusion

31.As of 13 October 2026, the Team Council’s 167 reports from 43 countries meet the working thresholds for Volume and Spread. The available evidence does not meet the defined thresholds for Frequency, Consistency or Corroboration. The appropriate conclusion is that a cross-country member-reported concern warrants continued examination, while its timing, precise mechanisms and independent substantiation remain insufficiently established for a final pattern finding or a specific policy prescription.

32.This note is circulated as an interim review of the evidence available to the Team Council. It does not speak for any individual member, employer, government or company.