The latest Employment Hero SME Index reveals that employment growth among SMEs was strong in the past year but is showing signs of a downward trend. As of July 2022, the average number of employees among Australian SMEs was 12.6 points more than in January 2019, however, the Index fell by -0.1 points between June and July 2022. While year-on-year comparisons show SMEs are still growing (the Index experienced 7.7 point growth between July 2021 and July 2022), the pace of growth is slowing as well.
Smaller enterprises (one-19 employees) were the first to show signs of a decrease in employee size of -0.5 per cent since June 2022, while medium enterprises (20-199 employees) and larger enterprises (200+ employees) experienced only modest employee growth in the past month, at 0.1 per cent and 0.5 per cent respectively. Similarly, SMEs in all Australian states and territories experienced growth in employment numbers compared to a year ago but in a uniform trend, employee growth since June 2022 marginally declined across all states and territories.
Year-on-year median wages increased overall by 7.5 per cent in July 2022, and by 0.5 per cent over the last month. In July, the median hourly rate for employees working in Australian SMEs was $33.75. While wages of employees in smaller enterprises grew by four per cent since July 2021, the biggest growth was seen among employees in medium enterprises and larger enterprises (+6.3 per cent and +6.7 per cent respectively). The median hourly rate for employees in small, medium and large enterprises was $30.00, $36.57 and $35.14 respectively in July 2022.
“Small businesses play a vital part in the Australian landscape, they are the backbone of many economies,” Ben Thompson, Founder and CEO of Employment Hero, said. “It is a challenging environment but our July Employment Hero SME Index is encouraging and shows the resiliency of the small and medium-sized employment sector.
“Our latest data shows that while employment growth has been strong among SMEs over the past year, the pace of growth is slowing,” Thompson added. “This is most evident among smaller enterprises that have experienced a contraction in employee size over the past month. Wages growth has been strong overall, however, there has been some divergence between states and territories, as well as between SME sizes.
“It is positive to see the average employee size increase and growth of the median wage since last year given that the JobKeeper program has ended and the intense economic pressures at play,” he continued. “I commend the small-business community for their efforts in keeping millions of Australian workers in jobs and keeping wages growing, despite these challenges.”
Thompson pointed out that amongst the backdrop of rising costs of living, 72.2 per cent of business leaders stated they support recent wage increases in Employment Hero’s July SME Economic Sentiment Survey. He said that these figures on wage growth demonstrate SMEs’ commitment to their employees and to their community.
“There’s also a second story here. We know that the last few years have made it tougher to find and keep skilled talent, so SMEs are also more likely to pay more for top performers to compete with the skills shortage,” Thompson said. “With tough economic conditions still on the horizon, I urge businesses to keep an eye on their talent management. Are you staying on top of wages and your employer brand? Are you exploring all options of employment, including remote hiring? Can new technology or processes help drive better efficiencies and returns for your business? Through upheaval, businesses who stay agile and continue to optimise will be best placed to make it through.”
