The first hire should not be the hardest one

RC/TM/2026/CL.4 | 27 May 2026

Dear members,

May brought a useful change in scale: we have more evidence about the hiring-cost problem, and a clearer view of who is reporting it. We do not yet have a draft standard. That is deliberate. Our task is to understand the pattern well enough to propose something practical, then test it with the people who would have to use it.

What moved this month

On 5 May, the Assembly’s pledge program opened. It is a way for businesses to make public commitments to the standards adopted by the Assembly; it does not replace the work of developing and consulting on those standards.

On 12 May, PL-001, the Platform Council’s first issue, passed the five-part pattern test. On 19 May, the UK Late Payments Bill was introduced in the House of Lords. And on 26 May, the Platform Council published its draft Fairness Standard for consultation. These are not Team Council decisions, but they show the wider process in motion: evidence, a test of whether the problem is patterned, a draft, then consultation.

For Team Council, the central movement this month is in the evidence. As of 27 May, we have 51 members in 25 countries and 33 reports from 14 countries. Sixteen of those reports came in during the last 30 days. All 33 concern hiring costs. The median amount members say is at stake is about US$2,770.

That number matters, but it is not the whole problem. A cost can be difficult to plan for even when it is not the largest expense on a business’s books. Unclear contributions, separate registration steps, and payroll rules that are hard to predict can make a first hire feel like a commitment whose full price is not known in advance.

Our reports also reflect businesses at different stages. Among reporting members, 36% are working alone; 42% have teams of 2–9; 18% have 10–49; and 3% have 50–249 employees. The percentages do not total 100 because of rounding. The reports are not a representative survey of every small employer, and we should not treat them as one. They are evidence of recurring experiences that we can examine and test.

A member’s hiring question

Imagine an owner working alone who is considering a first employee. The owner can estimate the wage, but wants to know the full employer cost before making the commitment: what contributions will apply, which registration steps are required, and what payroll obligations will continue month by month. If those answers are difficult to find or compare, the decision is not simply whether the business has enough work. It is whether the owner can responsibly plan for a cost that may change with rules they do not yet understand.

The question is not whether a small employer should meet its obligations. It is whether those obligations can be clear, proportionate and predictable enough for the first formal hire to be possible.

That distinction matters to our work. We are not asking for obligations to disappear. The Team Council’s agenda is to examine whether costs for a business’s first ten hires can be lower and simpler through phased social contributions, one-stop payroll registration and predictable rules. The aim is to make formal employment more attainable while keeping the rules understandable and workable.

What we are learning

First, “hiring cost” is not one item. It includes the amount paid to the worker, employer-side contributions, and the time and effort needed to register and administer payroll. If we measure only one part, we may propose a fix that leaves the barrier in place.

Second, the first hire is a distinct decision. A business that has never employed anyone may face a different practical hurdle from an employer that already has a payroll system and experience with the rules. Our proposal should account for that difference without assuming that every business has the same needs.

Third, the evidence has to travel across countries carefully. Reports currently come from 14 countries, and the rules differ. We can identify recurring patterns, but a workable standard must distinguish principles that can be shared from details that depend on national systems. The ILO estimates that MSMEs account for around 70% of employment worldwide and that about 80% operate in the informal economy; those figures help explain why the design of formal hiring rules deserves attention, but they do not tell us which particular policy will work everywhere.¹

What comes next

Team Council is at 2 of 5 parts of the pattern test. We will continue checking volume, frequency, consistency, spread and corroboration before deciding whether the evidence is strong enough to advance. Passing the test would not itself settle the policy question. It would mean we have grounds to draft a proposed fix and ask members and others to challenge it.

Our next work is to keep gathering comparable accounts through the First Ten Hires cost diary and employment-cost comparison. Please be as specific as you can about the situation, the costs involved, the steps you had to take, and what you could not predict. Please do not share information that would identify another person without their consent.

The wider Assembly calendar gives us two dates to keep in view: the next Open Table is expected in June as part of the monthly series, and 27 June is MSME Day. The Platform Council’s consultation runs from 2 June to 2 July. Those are Assembly-wide milestones, not Team Council deadlines. We will publish a Team Council timetable once the evidence review gives us a responsible basis for one. The Assembly’s next quarterly report is due in July.

Thank you to everyone who has taken the time to report a cost, explain a process or help us understand what a first hire looks like from the employer’s side.I am grateful for the care and persistence members bring to this work, whether or not their names appear here.

Notes and sources

Sources

1. International Labour Organization — Micro, small and medium-sized enterprises