In June, the median monthly hours worked by employees plummeted by a significant -8.6 percent month-on-month (MoM), while July witnessed a 2.3 percent increase in the median hourly rate.
These trends by Employment Hero SME Index point to SME owners grappling with the delicate balance between overheads, business expansion, and profitability.
The decline in median monthly hours worked was consistent across states, territories, business sizes, age groups, and most industries, with the exception of Science, Information, and Communication Technology, which remained stagnant. This fall aligns with the Reserve Bank of Australia’s (RBA) projection of a continued decrease in average hours worked due to anticipated labor market shifts.
In June, the median monthly hours worked settled at 135.7, with New South Wales leading (143.3) and Tasmania trailing (124.1). Western Australia experienced the smallest MoM drop (-7.2 percent), while Tasmania recorded the most substantial decline (-9.8 percent). Across sectors, Construction and Trade services saw the highest median hours worked (166.1), whereas Healthcare and Community Services, which also encountered the most significant MoM drop (-8.7 percent), had the lowest.
Simultaneously, July witnessed a notable leap in the median monthly hourly rate, reaching $36.87 – the highest in three months. This ascent is partially attributed to the Annual Wage Review, leading to wage increments in occupations governed by Awards, impacting 22 percent of Employment Hero users.
Geographically, the Northern Territory saw the most significant MoM hourly rate increase (3.4 percent), with the Australian Capital Territory boasting the highest median hourly rate among states and territories ($40.40). Within industries, the Science, Information, and Communication Technology sector commanded a median hourly rate of $58.00, while Healthcare and Community Services marked the most substantial MoM growth of 2.5 percent. Notably, individuals under 18 years of age witnessed a considerable MoM surge of 2 percent.
Furthermore, employee growth experienced a marginal decrease (-0.1 percent) since June 2023, impacting small businesses more profoundly than medium and large counterparts. Most industries faced a monthly decline, except for Science, Information, and Communication Technology, which demonstrated a modest MoM growth of 0.2 percent. The Australian Capital Territory and South Australia also defied the downward trend, exhibiting slight MoM increases of 0.1 and 0.04 percent, respectively.
Ben Thompson, Co-founder and CEO of Employment Hero, said: “I expressed concern months ago that the challenges Australian workers would face in the second half of the year would be securing ample work hours and, worst case scenario, holding onto their jobs. A robust economy relies on the stability and growth of our SME sector. As our data has shown repeatedly, however, this is challenging when the rate at which wages are increasing in line with inflation is downplayed. Employees earning more is great, and we know the positive impact this has on society. Still, we remain conscious of short-term gains that produce long-term pain for Australian workers moving further into the year’s second half.
“In these frankly brutal times for SMEs, seeing month-on-month declines in employment within the community as large corporations celebrate record profits is a bitter pill to swallow. With small businesses constituting nearly 99 per cent of our nation’s enterprises and providing jobs for 66 per cent of our workforce, it’s unsettling to observe in our Index a wage-price spiral engulfing SMEs, coupled with reduced working hours as a strategy to manage overhead pressures.
“New insolvency numbers released by ASIC recently showed 995 business collapses had been recorded since July. Undoubtedly, the current landscape tests Australia’s employment fabric as both sides acutely feel the pinch. On the one hand, employees are working fewer hours while grappling with escalating living costs. On the other, businesses confront the harsh reality that expanding work hours might be unfeasible, yet profitability could wane without doing so. It feels like a long road ahead for small businesses, but we must continue to weather this storm together,” Mr Thompson continued.
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. In July 2023, Australian SMEs’ average number of employees was 25.3 points more than in January 2019.
National advertised salary trends
In a separate report by SEEK, the leading employment platform, it has been revealed that there was a 0.4% increase in advertised salaries for the month of July. This growth rate slightly exceeded the consecutive 0.3% increments recorded during the preceding months of April, May, and June. Over the span of the entire year, a notable surge of 4.6% in advertised salaries has been observed. This represents a slight uptick from the 4.5% rise recorded in the year leading up to June.
According to SEEK’s analysis, the advertised salary growth landscape has exhibited robust expansion across all states. Notably, Queensland emerges as the frontrunner, boasting a noteworthy 5.3% surge in advertised salary growth for the year culminating in July. However, the territories tell a different story, with the Australian Capital Territory experiencing a more moderate growth of 3.7%, while the Northern Territory recorded a relatively subdued 2.5% rise in advertised salaries.
When scrutinizing salary trends within various industries, SEEK’s insights unveil key patterns. Government roles, for instance, have shown the slowest growth in advertised salaries, registering a mere 0.9% increase over the year. Roles within the Information & Communication Technology sector (1.8%) and Consulting & Strategy field (1.7%) also reflect sluggish advertised salary growth, aligning with the relatively subdued labor demand prevailing in these industries.
Contrastingly, the Trades & Services industry stands out for its robust advertised salary growth of 5.9%. This sector maintains a consistent pattern of strong advancement in advertised salaries and claims the title of the fastest-growing among the larger industries.
The analysis of these trends, attributed to SEEK, sheds light on the multifaceted dynamics at play in the employment and salary landscape, reflecting the evolving economic conditions and industry-specific demands.
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