The minimum wage is being increased by 3.5 per cent, and the super guarantee is being increased to 12 per cent of ordinary time earnings for employees from July 1. New research has indicated that many Australian small and medium-sized enterprises (SMEs) are reassessing their staffing strategies to address a potential cash flow crunch.
According to ScotPac’s bi-annual SME Growth Index Report, 45 per cent of SMEs are addressing this by turning more to contractors to fill the roles needed for their businesses.
In addition, the Index noted that 30 per cent of SMEs have put a freeze on hiring new staff while 14 per cent are increasing use of outsourcing, including offshore services. Thirteen per cent have opted to cut back on employee hours or total headcount, and 5 per cent intend to close or sell their business instead.
The report also noted that the average SME headcount has fallen from 88 back when the Index was first published in 2014 to just 55 today.
ScotPac CEO Jon Sutton said these staffing trends could have far-reaching impacts across the broader economy as SMEs employ around 7.5 million Australians.
“The imminent wage and super hikes are understandably prompting SMEs to look at their staffing levels and, in some cases, make difficult decisions,” Sutton said. “However, managing higher wages and super payments doesn’t have to come at the expense of growth or stability.
“We encourage all business owners to sit down with their advisors as a first step, assess the impact of regulatory changes on their cash flow, and explore all possible management strategies. With the right operating and finance solutions in place, it is possible for SMEs to continue to grow and support their teams even as employee costs rise.”
This article was first published on sibling website Inside Small Business.
