Almost two-thirds increasing base wages of staff
Rising labour costs and a shortage of skilled workers in certain fields have put pressure on businesses to rethink their approach to staffing and management.
As a result, HR professionals are re-evaluating how to manage the workforce more effectively and efficiently while still meeting organisational goals.
In Western Australia, business confidence has reportedly suffered a hit after employers said they’re dealing with increased cost pressures and persistent skills shortages.
It can be recalled that the state boasted a historic downward trend of the state’s unemployment rate in early 2022, landing at 2.9 percent.
But even with the state tapping into the international student market and holidaymakers to address labour shortage, as previously reported by HRD, the state’s business sentiment has receded to its lowest level since the beginning of the COVID pandemic, according to the Chamber of Commerce and Industry WA (CCIWA).
As financial issues have become more dire in recent months, the state has been suffering an environment of increased uncertainty and risk.
What once was considered “the best in the nation” when it came to the job market, WA employers are rethinking their strategies and operations, with most businesses reportedly increasing base wages.
According to the CCIWA report, the lowest sentiment was recorded among businesses in health care and social assistance (15%), retail trade (17%), and food services (22%).
In its most recent survey, 33% of WA’s businesses expect a decline in economic conditions soon. And looking ahead to 2023, 44% predict the state economy to take a downturn. Reportedly, the overall confidence of the WA businesses has reduced by a whopping 29 points since the post-COVID period.
The most positive results came from the professional services industry, with 67% expecting to get better. The construction sector is also not too far behind, with 50% of them being hopeful. With regards to the biggest challenge, WA businesses are having difficulty finding employees. Professional services, resources, and retail sectors are all facing this issue. On average, CCIWA said that these industries are trying to fill six vacant positions.
To address this, 59% of the businesses are reportedly increasing their staff’s base wages.
“On average, WA businesses indicated they have increased base wages by just under 11 percent as part of an annual wage setting process — up four percentage points from last quarter and significantly higher than Western Australia’s latest annual Wage Price Index of 3.3 percent,” CCIWA chief economist Aaron Morey said in the media release.
“These cost pressures, combined with broader inflationary pressures, continue to damage business’ bottom lines. Meanwhile three in five businesses reported declining profit margins, with CCIWA’s profitability index remaining near record low levels,” he said.
“Facing risks of global inflation and geopolitical tension, our decision-makers should refocus on policy which encourages economic growth and resilience, in particular by lowering the burden of payroll tax in WA,” Morey said.
