Aussie SMEs are gaining momentum heading into the third quarter of 2022, according to people management platform Employment Hero’s first edition of its Employment Hero SME Index, a yardstick of performance based on the average number of employees per business relative to the average number of employees they had in January 2019.
More SME jobs
As of June 2022, the average number of people employed by Australian SMEs was 28.9 per cent more than in January 2019, a significant increase that comes despite the disruption SMEs have faced due to the pandemic, supply chain issues and rising interest rates.
The Index grew 22.7 per cent between December 2021 and June 2022, and 10.5 per cent between May and June 2022.
The national picture
Across the country, SMEs in the ACT had 2.9 per cent more employees, Western Australia 2.4 per cent, and South Australia 2.2 per cent. The other states and territories also experienced growth, although at a more modest rate – the Northern Territory experienced a growth rate of1.7 per cent, New South Wales 1.5 per cent, Victoria 1.3 per cent, Queensland 1.4 per cent and Tasmania 0.5 per cent.
The retail, hospitality and tourism sectors were the best performing in terms of increased employee numbers, with a net employee growth increase of 1.9 per cent. Next came construction and trade services at 1.7 per cent; 1.3 per cent in healthcare and community services; 1.2 per cent in science, information and communication technology; and 0.7 per cent employee growth in agriculture, mining, and energy.
SME sentiment revealed
Alongside their SME Index release, Employment Hero also conducted an SME Economic Sentiment Survey, which sampled over 500 of its their customers.
SMEs overwhelmingly welcomed the Fair Work Commission’s wage increases that came into effect this month, with 72.2 per cent of respondents favouring of the wage increases, and only 17.1 per cent being against them. Of those in favour, 24.7 per cent are planning to review their prices to accommodate the shortfall, and of those who are against, 22.7 per cent are planning on reviewing their costs.
SMEs revealed their top priorities for FY 2022/3 as growing the business domestically (27.2 per cent), preserving cashflow (27 per cent), and investing in the growth of the business (26.4 per cent).
An on the topic of what they want to see from the Federal Government, 35.5 per said that wage subsidies and tax reform would have the most significant impact on the small-business community. Other measures are being sought, with 30.1 per cent of respondents also looking for free ongoing business planning services, 28 per cent a more accessible loan recovery scheme, and 26.8 per subsidies on further education and training.
SME leaders are concerned about potential recession, with 79.1 per cent of respondents worried about talks of a recession, of whom 40.8 per cent describe themselves as feeling “very worried”. Only five per cent of respondents were not worried at all.
However, despite the economic challenges they are facing, economic sentiments among Australian SMEs are primarily positive. While 12 per cent feel financially stressed and 9.3 per cent feel worried, 23.7 per cent feel optimistic, 18.1 per cent feel as if it’s ‘business as usual,’ and 16.3 per cent are highly motivated. Overall, 71 per cent expressed a positive outlook about the new financial year.
“It’s safe to say that the last few years have been volatile for SMEs and their people. In the course of these unique circumstances, assessing the Australian business landscape has been challenging, especially regarding small businesses,” Ben Thompson, Co-founder and CEO of Employment Hero, said. “When it comes to the lifeblood of the Australian economy, we believe there is a significant knowledge gap in performance benchmarking tools.
“With the economic pressure, ongoing supply chain issues, world events, and climate concerns all impacting the Australian economy in 2022, we need to stay conscious of how SMEs are faring,” Thompson added. “This is precisely why we’ve launched the Employment Hero SME Index, to help this community and those that work with them assess the current state of play and benchmark their businesses against the average growth rate.
“Despite all the uncertainty, Australia’s small business community continues to show resilience. There are a lot of positives in these findings, and it paints an encouraging picture of what is to come and what can be achieved in the coming months,” Thompson concluded.