SMEs are cutting back employee hours as wages rise, according to new data from Employment Hero’s August SmartMatch Employment Report. Median wages have grown to a 12-month moving average of 6.2 per cent, while median hours worked have dropped by 2.4 per cent compared to last month.
The figures are a marked change from just a few months ago in July, when median hours worked were stable across most sectors.
The behaviour is an indicator of “labour hoarding”, according to the HR service provider. “Labour hoarding” refers to when businesses hold on to their staff to avoid dealing with labour shortages and recruitment costs in the future.
Ben Thompson, Employment Hero’s CEO and Chief Economist, expressed concern about “wageflation”, where wage increases outstrip economic output.
“Wage growth is outpacing productivity, which is completely unsustainable, particularly for small businesses folding under the surging cost of operating,” said Thompson.
“It’s becoming harder for business owners to strike the right balance between maintaining staff and managing wageflation, which means more Australians will inevitably be grappling with job insecurity and inconsistent wages. Wageflation over the long term creates problems on both sides of the market, particularly where a paypacket boost today could spell a layoff in the future.”
Uneven wage growth across Australia
Employment Hero found vast wage growth disparities across the nation. While ACT saw a 6.9 per cent YoY increase, South Australia lagged behind with a 2.6 per cent increase. Meanwhile, the Northern Territory’s growth went backwards by 0.2 of a percentage point.
Meanwhile, employment growth was led by SMEs in Western Australia and Queensland, at 7.2 and 5.3 per cent respectively.
Finally, SMEs in healthcare and community services had the fastest employee growth of all sectors with a 6.8 per cent YoY increase, while retail, hospitality, and tourism lagged behind, with a 1.5 per cent increase.
“It’s also alarming to see the disparity between economic activity across the nation,” said Ben Thompson. “While some regions and sectors are thriving, others are facing a lethargic economy where productivity ultimately suffers. When jobs growth across the country is uneven, this creates ripple effects for the communities who are most impacted.”
