The latest data from the Employment Hero SME Index, based on a comprehensive dataset of over 150,000 small and medium-sized businesses (SMEs) and 1.5 million employees, indicates a rise in average employee growth in September after a period of stagnation or decline.
However, the outlook for seasonal hiring during the upcoming holiday season is less optimistic due to the Reserve Bank of Australia’s (RBA) interest rate hike, which is expected to usher in a period of low consumer confidence. In September, the SME Index shows that SMEs, on average, witnessed a month-on-month (MoM) employee growth of 0.3 percent and a year-on-year (YoY) growth of 6.6 percent. Employment numbers increased in every state and territory. Tasmania had the largest monthly increase at 0.6 percent, while SMEs in the Northern Territory saw the smallest increase of 0.1 percent during the same period. SMEs in the ACT, New South Wales, and Victoria all experienced an MoM increase of 0.3 percent, while those in Queensland, South Australia, Western Australia, and Victoria saw a rise of 0.4 percent over the same period.
SMEs in every major industry also reported growth both MoM and YoY. SMEs in Retail, Hospitality, and Tourism saw the most substantial monthly increase of 0.5 percent, while those in Science, Information and Communication Technology experienced the smallest increase of 0.04 percent. Additionally, SMEs in Construction and Trade Services grew by 0.3 percent, and those in Healthcare and Community Services, as well as Manufacturing, Transport, and Logistics, both saw a 0.4 percent rise.
Ben Thompson, Co-founder and CEO of Employment Hero, expressed concerns about the RBA’s rate increase, stating that it could have a detrimental impact on Christmas for Australia’s SMEs. The rate hike, combined with the expected reduction in seasonal hiring as businesses aim to recover losses, is likely to lead to a drop in growth during the summer trading period.
“With already thin or shrinking profit margins, Australian SMEs face even greater financial burdens coming into the end of the year. Not to mention that Australian workers already grappling with the rising cost of living now must face the possibility of reduced job opportunities and hours as businesses scramble to adjust their plans and budgets. A move from the RBA to seemingly aid economic stability could realistically result in significant instability for our small business community and its workers,” Mr Thompson continued.
According to the SME Index, median hourly wages increased by 0.6 percent MoM and by 7.6 percent over the past year. The median hourly rate for employees working in Australian SMEs is $37.48 AUD, which is $0.21 more than in August 2023. While the SME Index for September reveals that employee growth is driving up median wages, this increase was not consistent across all regions. Median hourly rates increased in all states and territories, with increases ranging from 0.4 percent to 1.8 percent MoM, except for the Northern Territory, which saw a decrease of -3.1 percent.
Furthermore, median rates increased across most age groups MoM, with the exception of the Under 18s group, which saw no change. The 65+ year olds group experienced the largest increase at 0.6 percent. For 18-24-year-olds and 25-64-year-olds, median rates increased by 0.5 percent and 0.4 percent, respectively.