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Rising costs have thrust difficult staff decisions upon many SMEs, according to the non-bank lender’s latest data.
Australia’s small and medium-sized enterprises (SMEs) have been increasingly reassessing their staffing approaches in response to cost pressures, according to ScotPac data, with almost half (45 per cent) indicating plans to boost their use of contractors.
Part of the pressure is being driven by planned increases to the minimum wage and superannuation guarantee, both set to take effect from 1 July 2025.
At the start of the new financial year, the minimum wage will rise by 3.5 per cent and the super guarantee will increase from 11.5 per cent to 12 per cent of ordinary time earnings.
Almost a third (30 per cent) of respondents to the non-bank’s latest SME Growth Index report – compiled by research firm East & Partners from surveys of 724 SMEs – said they had frozen hiring.
Around one in 10 (14 per cent) said they would increase their use of outsourcing, including offshore services, while 13 per cent said they were cutting back on employee hours or total headcount.
ScotPac data also revealed 5 per cent of respondents intended to close or sell their business.
SMEs in the survey had operated for an average of 15.6 years, managing an average of 55 full-time employees.
ScotPac also noted that the average headcount had dipped considerably since the report commenced in 2014, when it sat at 88 full-time employees.
Jon Sutton, ScotPac CEO, commented on the trend revealed in the data, noting SMEs employ around 7.5 million Australians.
“The imminent wage and super hikes are understandably prompting SMEs to look at their staffing levels and, in some cases, make difficult decisions,” Sutton said.
“However, managing higher wages and super payments doesn’t have to come at the expense of growth or stability.
“We encourage all business owners to sit down with their advisers as a first step, assess the impact of regulatory changes on their cash flow, and explore all possible management strategies.
“With the right operating and finance solutions in place, it is possible for SMEs to continue to grow and support their teams even as employee costs rise.”
Sutton also said ScotPac’s team was ready to help brokers and their SME clients navigate cost pressures and regulatory challenges.
“ScotPac has been helping business owners manage employee costs and optimise their working capital for more than 35 years,” Sutton said.
“For example, ScotPac’s core invoice finance product enables SMEs to access payments due on invoices sooner so they can better manage their cash flow.”
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