The December Employment Hero SME Index revealed a decrease in NET employee growth by 0.3 per cent compared to the previous month. However, median hourly wages increased by 1.2 per cent after two months of no growth.
These trends were observed across all industries in all states and territories, indicating a national trend not restricted to specific regions or sectors.
The data shows that in the 12 months, the NET employee growth for Australian SMEs grew by 8.6 per cent, and median hourly wages increased by 8.2 per cent. This is significant because it indicates that wages are not only keeping pace with inflation (as measured by the Consumer Price Index, which rose by 7.8 per cent in the same period) but are actually outpacing it.
Additionally, the SME Index, which measures the average number of employees per business relative to the average number in January 2019, shows that in December 2022, the average number of employees among Australian SMEs was 20.7 points higher than in January 2019. However, there was a decrease of -0.3 points in growth from November to December 2022.
SMEs see a decrease in employee growth
The data shows that month-on-month, employee growth among Small and Medium Enterprises (SMEs) declined the most in the Australian Capital Territory (-0.5 per cent) and in Queensland and South Australia (both -0.4 per cent), while those in New South Wales (-0.2 per cent) saw the least decline. Among the states, SMEs in the Northern Territory, Tasmania, South Australia, and Victoria all saw a decline.
Ben Thompson, the founder and CEO of Employment Hero, stated that despite the National Australia Bank’s (NAB) business confidence index rising slightly to -1 in December, it remains lower than the average.
According to the Employment Hero SME Index, the NET employee growth decreased, despite showing a growth of 8.6 per cent in the past year.
Thompson acknowledged that business activity is slowing down but emphasised that the resilience demonstrated by business owners will continue to shape their decisions. He also mentioned that it would be interesting to observe how the increase in skilled migrants and the expansion of visa policy will help to address talent shortages and drive up employee growth month-on-month.
“We can confidently say that once again, Australian wages are not lagging behind inflation; they have outpaced it. In December, we hit the highest rate of inflation since 1990, with CPI rising 7.8 per cent over the past 12 months, whilst our data shows median hourly wages grew by 8.2 per cent over the same period.
“Following a two-month lull, median hourly wages grew by 1.2 per cent across all states and territories and industries, which could be due to the holiday period. This growth did not flow into the median wage rates of Under 18s or 18-24-year olds, however, with both age brackets experiencing a decline of -7.5 per cent and -2.3 per cent respectively,” Mr Thompson added.
December brings mixed results
The SMEs and Medium Enterprises both showed signs of struggle, declining -0.3 per cent and -0.2 per cent, respectively, since November. Employee growth also declined across all industries month-on-month, with SMEs in Construction and Trade experiencing the biggest decline at -0.4 per cent and Healthcare and Community Services experiencing the smallest decline at -0.2 per cent.
Additionally, SMEs in Retail, Hospitality and Tourism, Manufacturing, Transport and Logistics, and Science, Information and Communication Technology all saw a decline of -0.3 per cent.
The data shows that in December, the median hourly rate for Australian Small and Medium Enterprises (SMEs) employees was $35.42. After remaining unchanged for two consecutive months, median hourly wages increased by 1.2 per cent since November.
SMEs in the Australian Capital Territory saw the greatest growth in median hourly rates month-on-month at 2.9 per cent, with New South Wales close behind at 2.1 per cent.
The median rates grew the least in Victoria at 0.1 per cent and West Australia at 1.3 per cent. Median hourly wages also grew across all industries month-on-month. Both Small and Medium Enterprises saw growth in median wages; however, median wages for employees in larger enterprises declined by -0.5 per cent.
Additionally, while the median rate grew month-on-month for workers aged 25-64 (+1.1 per cent) and 65+ (+2.1 per cent), it declined for those under 18 (-7.5 per cent) and 18-24-year-olds (-2.3 per cent).
The Employment Hero SME Index is available to download here.
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