The September data in the Employment Hero SME Index reveals that employee growth remains subdued in the sector amidst rising inflation and high-interest rates.
On the other hand, the number of SMEs employees grew by +8.7 per cent compared to the past year and by +0.1 per cent since August 2022.
As of September 2022, the average number of employees among Australian SMEs was 15.1 points more than in January 2019, but growth from August to September 2022 was marginal at only 0.5 points.
Similarly, smaller enterprises (one-19 employees) continue to struggle in September, showing a month-on-month stagnation, while for medium and larger SMEs, the growth pace is slowing. Employee size in smaller enterprises did not grow since August 2022, while medium enterprises (20-199 employees) and larger enterprises (200+ employees) experienced only modest employee growth, at +0.7 per cent and +0.9 per cent, respectively.
Pertaining to wages, the report revealed that year-on-year median wages increased overall by +7.9 per cent in September 2022 and by +1.0 per cent over the last month, with $35.00 being the median hourly rate for employees working in Australian SMEs during that period. Since September 2021, median wages grew by +7.3 per cent for the Under 18 demographic,+7.7 per cent for 18-24-year-olds,+8.4 per cent for employees aged 25-64, and +7.1 per cent among 65+ year-olds. The median hourly rate for employees was $16.50 for those under 18, $29.20 for 18-24-year-olds, $38.00 for 24-64-year-olds, and $35.00 for 65+-year-olds. The median wages for employees Under 18 experienced the most considerable month-on-month growth (+1.9 per cent). In contrast, median wages for employees aged 65+ remained unchanged over the same period.
Wages of employees in smaller enterprises grew by +4.4 per cent since September 2021. The most significant growth was seen among employees in medium and larger enterprises (+6.7 per cent and +6.9 per cent, respectively). The median hourly rate for employees in small, medium, and large enterprises was $30.90, $37.80, and $36.60, respectively in September 2022.
“While the WPI [Wage Price Index] from the Australian Bureau of Statistics reported 2.7 per cent annual growth in median wages in the private sector in June, our most recent data shows a higher annual median wage growth of 7.9 per cent year on year, however, overall employment growth has stagnated,” Ben Thompson, Founder and CEO of Employment Hero, said. “With this in mind we’re concerned that when the interest rate increases bite, as they inevitably will, SMEs will struggle to maintain headcount. I wouldn’t be surprised if we see business leaders take a more cautious approach over the coming months as we see the impact of higher interest rates working their way through the economy.
“The stagnant growth in the SME index forecast is understandable due to the economic volatility, which is why agile and real-time data is the way forward,” Thompson added.
The Employment Hero SME Index is created from the average number of employees per business relative to the average number in January 2019, for which the Index has been set to equal 100. The Index records trends and changes in business growth and declines across Australia, including a detailed analysis of business size, geographic location, and key industries.
