The latest Employment Hero SME Index found that growth in the small-business sector is slowing and hiring staff is becoming increasingly difficult as they cannot compete with the higher wages being offered by larger companies.
The Employment Hero SME index was 114.3 in August 2022 — 9.0 points higher since August 2021 — but only 0.4 points since July 2022.
The data revealed that SMEs in all Australian states and territories experienced growth in employment numbers compared to a year ago, but in a uniform trend, employee growth since July 2022 has been stagnant or marginally declined across all states and territories.
And it is the smaller enterprises that continue to struggle, demonstrating month-on-month stagnation, while for medium and larger SMEs the pace of growth is slowing.
Small enterprises (one to 19 employees) grew by +7.4 per cent in the past year (August 2021), but employee size did not grow (0 per cent) from the previous month (July 2022). Medium enterprises (20–199 employees) on the other hand, experienced modest employee growth in the past month (+0.7 per cent), and grew by +23.7 per cent in employees compared to August 2021. Larger enterprises (200+ employees) experienced the biggest growth in employee numbers, +30.9 per cent since August 2021, and +0.8 per cent since July 2022.
In an industry breakdown, construction is suffering the most with the construction and trades services recording a decline of 0.1 per cent since July.
SMEs in retail, hospitality & tourism grew in employee numbers by +0.2 per cent since July 2022 and +9.7 per cent since August 2021. Industry analysis employee growth is flat or marginally declining across many key industries, but all have experienced growth since August 2021.
Small businesses in healthcare & community services grew in employee numbers by +0.2 per cent since July 2022, and they grew by +10.6 per cent since August 2021 while those in science, information & communication technology industries did not experience any employee growth month-on-month (0 per cent), but have experienced a growth of +6.7 per cent from the previous year (August 2021).
For SMEs in manufacturing, transport & logistics there was also a stagnation, with no employee growth (0 per cent) since July 2022, however, it did grow by +7.4 per cent since August 2021.
And despite growth in wages in small businesses — up 5.1 per cent from August 2021 — larger businesses have increased their wages by up to 8.2 per cent, pricing out the SMEs competing for the same workers.
Workers at small companies earned the lowest median hourly rate at just $30.61, while those in medium-sized business earned $37.17 and larger firms were offering $36.35.
