The latest Employment Hero SME Index reveals that the monthly median hours worked by employees in June decreased by 8.6 per cent month-on-month while the monthly median hourly rate increased by 2.3 per cent in July.
Median monthly hours worked was 135.7 in June. Across industries, the most median hours worked was in the Construction and Trade services (166.1), and the least was in Healthcare and Community Services, which also experienced the greatest drop MoM (-8.7 per cent).
Overall, monthly hours worked by employees dropped month-on-month across all states and territories, business sizes, age groups, and critical industries, except Science, Information and Communication Technology which stagnated, an indication that underemployment has hit the SME sector.
The figures are in line with the RBA’s Statement on Monetary Policy Report, which forecasted a continued decline in average hours worked due to the expected labour market downturn.
Meanwhile, July’s median monthly hourly rate saw its greatest jump in three months, sitting at $36.87. This increase is partly due to the Annual Wage Review that saw a wage jump in occupations covered by Awards, affecting 22 per cent of Employment Hero users.
The median hourly rate for the Science, Information and Communication Technology industry was $58.00, as Healthcare and Community Services experienced the greatest month-on-month jump of 2.5 per cent. Under 18s also saw the largest month-on-month jump at two per cent.
Further, the average employee growth marginally decreased (0.1 per cent) since June 2023, with small businesses feeling the hit more than medium and large businesses. Industries saw a monthly decline almost across the board, except for Science, Information and Communication Technology, which saw month-on-month growth of 0.2 per cent.
The Index noted that the figures are an indication that SME owners are struggling to balance overheads with business growth and profitability.
“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,” Ben Thompson, Co-founder and CEO of Employment Hero, said. “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 a great thing, 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,” Thompson added. “”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.”
Thompson pointed out that 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,” he said. “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.”
