Rising proportion maintain headcount
A new analysis of SME employment intentions by MYOB reveals a declining proportion of business owners creating new jobs this year, especially smaller business operators. The company believes current political and economic uncertainty will likely contribute further to the trend.
According to a review into three years of employment data from the MYOB Business Monitor, only 14% of SMEs overall intend to take on new staff in the 12 months to February 2014. This compares to 19% who intended to in the 12 months to February 2012. Further, the proportion intending to increase staff pay fell from 24% to 21%.
The biggest drop in intention to employ over this two-year period occurred amongst small business operators (with 5 to 19 employees), suggesting a hold-off on growth plans. This was followed by solo operators (with 0 employees) – 32% to 27% and 17% to 9% respectively.
Conversely, the proportion of SMEs overall intending to maintain existing staff levels rose from 61% to 70%. The proportion maintaining staff pay levels also rose, from 57% to 63%.
MYOB CEO Tim Reed says, “In times of uncertainty, it’s natural for business owners – especially those with no or few employees – to bunker down rather than lift their investment in people. The state of the Australian economy directly impacts their confidence in the future of their business. When their confidence drops, they take less risk in investing in new staff members.
“That’s also the case with the country’s political health. Business owners wait hopefully for legislation and other fiscal and monetary policy moves that have a significant positive effect on their livelihood.
“This has obvious ramifications for the broader public. With more than two million small businesses, their ability to create further employment has strong implications for the job market.
“Having said that, the MYOB research analysis shows the local SME job market overall has remained fairly stable in the last three years. This is promising for the more than 7.4 million Australians already employed by this sector, giving them confidence about their employment situation. Combined with record-low interest rates, this will hopefully translate into stable consumer spending.”
Mr Reed explains further, saying, “Taking on staff can be a major step for small businesses, as the employment process considerably increases the number of compliance issues they have to deal with.
“We need to focus on ways to make the process as easy as possible for SMEs. They’re often the first source of employment, particularly for young Australians. One way to do this is to streamline their compliance obligations and reduce the cost of employment.
“To drive a healthy domestic economy, we must encourage smaller business operators to persist with their plans for growth. We must provide a better environment for them to succeed through reduced red tape, better training and stronger support channels.
“MYOB has taken this journey. We understand the big difference this kind of encouragement and care can make in helping a business owner realise their potential. Few ventures succeed without continued industry, government and public support.
“We hope which ever government is elected it is on the side of smaller businesses and plans to take action in enabling their success. That’s what’s needed to ensure increased optimism builds confidence and translates into real performance that will in turn boost the domestic economy.”
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Established in 1991, MYOB is Australia's largest business management solutions provider. It makes life easier for approx. 1.2 million businesses across Australia and New Zealand, by simplifying accounting, payroll, tax, practice management, CRM, websites, job costing, inventory and more. MYOB provides ongoing support via many client service channels including a network of over 40,000 accountants, bookkeepers and other consultants. It is committed to ongoing innovation, particularly in cloud computing solutions, and now spends more than AU$30 million annually on research and development. In 2013, MYOB expanded its offerings with the acquisition of accounting solutions provider BankLink. For more information, visit myob.com.au.