More than half a million small and medium-sized businesses have cut their employees’ hours to try to save money, The Times can reveal.

The effects of the recession on small firms are laid bare by figures showing that nearly two million people are working fewer hours and taking home less pay than two months ago.

In a survey of 4,633 firms, the Federation of Small Businesses (FSB) also found that nearly a fifth of the 4.7 million small firms in Britain had cut jobs since the summer.

Stephen Alambritis, the head of public affairs at the FSB, said: “This shows how serious things have become for small business owners who are right in the firing line when the financial situation gets tough.”

Small and medium-sized companies employ more than 13 million people and, given that nine in ten employ fewer than four, losing just one member of staff or asking others to work a shorter week can be catastrophic.

The Government has promised to support small businesses as they struggle with higher bank charges, stricter loan terms and rising utility bills. Last week the Chancellor and Lord Mandelson announced that up to £4 billion was available for small firms’ lending from the European Investment Bank (EIB). The week before, ministers agreed to reconstitute the Small Business Forum to bring banks and firms together to resolve their differences.

In the meantime, the study found that a quarter of small businesses have imposed a recruitment freeze in the past two months and 47,000 have shut down. Nearly a third of small firms – equivalent of 1.4 million businesses – are considering shutting.

Lorely Burt, MP, the small business spokeswoman for the Liberal Democrats, said: “The Government has ploughed money into the banks but I see no evidence of banks having done anything to help small businesses.”

Separately, manufacturers say they are cutting back on hours to save the jobs of skilled workers who would otherwise face redundancy. Deferral or freezing of pay awards has risen to its highest level for five years.

A spokesman for the Department for Business, Enterprise and Regulatory Reform said: “We recognise that some small businesses are having to tighten their belts. We will do everything we can to support them through the current global economic difficulties.”