As job losses accelerate in early 2025, small business owners face a new challenge: how to protect staff while navigating economic uncertainty and shifting workforce expectations.
If you run a small business in Australia right now, chances are you’ve already felt the shift. Customers are a little more cautious. Invoices are taking longer to be paid. And staff — if you’re lucky enough to have a full team — are asking quiet questions about job security.
That’s because the early 2025 job loss figures have sent a ripple through the business community. According to ABS data and recent news reports, we’ve just come through one of the sharpest employment dips since the pandemic — and while the headline numbers focus on big sectors like tech, retail, and construction, the real impact is showing up across the board.
For small businesses like mine, this isn’t just a macroeconomic concern. It’s deeply personal. We employ people we know by name. We see the faces behind the payslips. And when the broader economy starts shedding jobs, we feel it in our revenue, in our team morale, and in the impossible balancing act of keeping people employed while trying to keep the business solvent.
What’s causing the rise in job losses? It’s a mix. Interest rates are still high, keeping a lid on household spending. Large projects are being delayed or cancelled due to cost blowouts and planning uncertainty. And corporate confidence is shaky, with some firms choosing to pre-emptively cut staff before a full downturn sets in.
But one of the lesser-talked-about drivers is structural fatigue. After years of pandemic pivots, digital upgrades, compliance changes, and wage pressure, many businesses — large and small — are hitting a point of exhaustion. They’re downsizing not just because they’re losing money, but because they’re scaling back their ambitions. That’s something policy makers should take seriously.
From revenue dips to team morale
The big question for small business owners is: how do we respond?
First, we have to face the reality. While the broader employment narrative still clings to “low unemployment” headlines, the lived experience says otherwise. Applications for part-time and casual jobs have surged. Staff are more risk-averse. Some are looking for side gigs or “just-in-case” roles. Others are leaving entirely — not for a better offer, but because they’re burnt out and taking a break.
If you’re an employer, that means rethinking your workforce strategy for the rest of 2025. Are your staffing levels sustainable? Could automation or workflow simplification reduce pressure without hurting jobs? Are you prepared to have open conversations with staff about where things stand?
Second, it’s time to get proactive about staff retention and wellbeing. One of the risks in a downturn is that businesses start to make reactive cuts — but lose their best people in the process. If you’ve got high performers, now is the time to engage them. Be transparent about the state of the business. Ask what support they need. Explore creative ways to manage costs — like job sharing, shorter weeks, or internal secondments — before considering layoffs.
There’s also an opportunity here. As the corporate sector tightens, the talent pool is widening — especially in specialist roles that small businesses often struggle to fill. Designers, developers, marketers, supply chain experts — many are now open to freelance, part-time, or flexible contracts that weren’t available a year ago. If your business is stable and has a growth strategy, this could be your moment to pick up skills that used to be priced out of reach.
At the same time, small businesses should be lobbying for better government support around hiring, upskilling, and job stability. Wage subsidies helped during COVID, but they’ve since dried up. Grants for digital transformation or export readiness are great, but mean little if staff numbers are shrinking. We need policies that back employers to retain staff through turbulent patches — not just hire and fire based on the economic weather.
And let’s not forget the human side. For many business owners, making redundancies is the hardest decision they’ll ever face. It’s not just an operational issue — it’s emotional. If you’re in that position, it’s worth speaking to your accountant, HR advisor, or even a business mentor before acting. There are often options — staggered reductions, role reshaping, temporary stand-downs — that are preferable to full separation.
Long-term, the lesson from this jobs downturn may be that flexibility is the new resilience. Businesses that can shift quickly — in staffing, product, process or customer base — are the ones that survive. But that only works if your team trusts you enough to adapt with you. That trust is built through honesty, empathy, and action — not just cost-cutting.
If early 2025 is teaching us anything, it’s that the era of “set and forget” staffing models is over. Small businesses will need to be more agile, more transparent, and more values-driven than ever before. But if we get it right, we won’t just keep people employed. We’ll build teams that are more loyal, more invested, and more ready to grow when conditions improve.
Because they will improve. Job markets are cyclical. Confidence returns. Spending rebounds. And those of us who navigate this year with integrity — both to our businesses and our people — will be the ones still standing when the next opportunity wave comes.
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