KUALA LUMPUR (Dec 8): Australia’s employment outlook for 2015 continues to look uncomfortable with small businesses – which account for 50 percent of private sector employment - set to significantly reduce headcounts and cut their wage bills.
In a statement Monday, business banking analysts East & Partners (East) has found that Micro businesses, with A$1-5 million in annual turnover, and SME businesses turning over A$5-20 million are planning to cut their headcounts, while larger businesses are set to add staff.
East said that according to the Australian Bureau of Statistics, Australia’s unemployment rate in November was at 6.2%, and moved through the 6% barrier in May.
East’s forecasts are partly based on a direct interviewing program with a structured, national sample of 984 businesses interviewed around Australia carried out in November 2014.
The research found that Micro businesses planned headcount reductions averaging 6.6% in the first half of 2015, while SMEs planned a 2.9% cut.
It said both business segments also forecast lower wages expenses, with Micros expecting a fall of 5.5% and SMEs a 4% decrease.
Emphasising the two-geared nature of the economy, however, corporate businesses turning over A$20-725 million are projecting a 4% headcount increase, while the largest Institutional businesses project a 3.3% increase, said East.
It said both the corporate and institutional segments expect their wages expenses will rise, by 1.8% and 1.3% respectively.
Lachlan Colquhoun, Head of Markets Analysis at East & Partners, said the results further reinforced suggestions for a very uncertain period ahead for the economy in 2015.
“Small business are major drivers of employment, accounting for around half of all private sector employment and around 46 percent of GDP, and these results point to further rises in unemployment next year,” said Colquhoun.
He said larger businesses might be adding headcount but if businesses are not hiring at a grassroots level the two-geared economy will continue, and the wider economy will struggle to achieve significant momentum.”
“Particularly concerning are comparisons with historical ABS employment data which, based on these forecast employer hiring/retrenchment plans, may well be seriously under-stated.
“This is worrying news indeed from the economy’s largest employment growth engines,” he said.
East has added headcount and wages projects to its research platform, and will continue to monitor employer intentions as part of its ongoing research.