Small and medium-sized enterprises are a driving force in the economy, and it’s no secret that their success is crucial.
That’s why it’s encouraging to see a recent survey reveal a significant increase in employment among Australian SMEs, with the number of employees growing by an impressive 7.7 per cent over the past year.
While monthly growth was modest at 0.1 per cent, it is clear that small businesses in Australia are on the rise and are not likely to slow down anytime soon.
However, the growth in SME employment numbers has been stagnant or marginal in every state and territory since October 2022.
According to the Employment Hero SME Index, in November 2022, Australian SMEs’ average number of employees was 17 points higher than in January 2019. However, the growth from October to November 2022 was only marginal at 0.7 points.
Every state and territory saw growth in employment numbers among SMEs compared to a year ago in November 2021, with South Australia (10.6 per cent), the ACT (9.6 per cent), and West Australia (8.5 per cent) experiencing above-average growth.
SMEs in the Northern Territory, the ACT, Queensland, and Tasmania did not see any growth from October to November 2022, while SMEs in West Australia (0.2 per cent), South Australia (0.1 per cent), New South Wales (0.1 per cent), and Victoria (0.1 per cent) experienced only minimal growth over the same period.
In November, the median hourly rate for employees working in Australian SMEs was $35.00. Since November 2021, median wages grew by 6.8 per cent for those under 18, 7.9 per cent for 18-24-year-olds, 8.6 per cent for those aged 25-64, and 6.7 per cent for those over 65.
Business sentiment worsening
In what many would regard as a disastrous turn of events, indicators of SME success, such as sales, profit, and growth, are beginning to suffer, implying that the impact of increasing interest rates is beginning to hurt consumer spending.
ALSO READ: Australian small business sentiment worsens amid recession fears
While supply chain concerns appear to be subsiding, inflationary pressures influence operating costs. Compared to 22 per cent last month, only 17 per cent of SMEs currently operate at higher revenues than before the pandemic.
According to the SME Sentiment Tracker by ACA Research, short-term revenue forecasts have deteriorated, with those expecting revenues to fall increasing to 12 per cent from 6 per cent in October.
As uncertainty grows, growth estimates for the next 12 months fluctuate, with only a 36 per cent surge in growth, down from 41 per cent a month ago.
Ben Thompson, Founder and CEO of Employment Hero, said: “Our November data still indicates that SMEs across Australia have seen growth year on year. The standouts were South Australia, the ACT, and West Australia, which all experienced above-the-national-average growth.
“The pace of employment growth from October to November tells a similar story to previous months; while employment growth has not declined (which, if we reflect on the last 12 months, is remarkable in itself), it has been stagnant or marginal. Specifically, those SMEs in the NT, the ACT, Queensland, and Tasmania did not see growth month on month.
“There’s no sugarcoating that SMEs have a tough year on the horizon as economic pressures and ongoing supply chain issues take their toll. The resilience shown by business owners over the last few years will continue to underpin every decision they make.
“While the demand for talent might be softening, it’s still there. It will be interesting to watch how the surge in skilled migrants and the expanded visa policy will help to alleviate these talent shortages and push up month-on-month employee growth.
“While median wages have grown across all age groups year on year, the median rates month on month differ across age brackets in our November data. While under 18s and 18-24s experienced growth, this was not the same for 25-65+-year-olds. For 65+-year-olds specifically, the median hourly rate has not changed in three consecutive months,” Mr Thompson added.
Employment Hero SME Index tracks the average number of employees per business as the benchmark for their monthly growth rate. More here.
Keep up to date with our stories on LinkedIn, Twitter, Facebook and Instagram.
