TOP GAINS IN SMALL FIRMS
WHEN IT COMES TO COST OF LIVING SMALL IS BIGGER AND BETTER, WRITES LAUREN AHWAN
SMALL business workers are coping far better than the average Aussie when it comes to cost of living pressures, with new research showing their wages have lifted by 7.5 per cent in the past year.
In comparison, Australian Bureau of Statistics data shows average wages have grown just 2.6 per cent annually, while the current consumer price index is 6.1 per cent.
This means those employed by SMES have effectively pocketed a modest 1.4 per cent real wage increase, ahead of most workers who experienced a 3.5 per cent real wage cut.
SMALL BUSINESS IS VITAL
The latest Employment Hero SME Index shows that wage growth was highest for SME workers in the ACT, who recorded an increase of 9.1 per cent.
Above-average increases were also recorded for workers in Western Australia (8.8 per cent), Queensland (8.2 per cent) and NSW (8.1 per cent).
Smaller increases occurred in Tasmania (5.8 per cent), South Australia (5 per cent) and the Northern Territory (4.4 per cent).
Overall, the index showed the number of workers employed at SMES increased more than 7.7 per cent in the past year.
Employment Hero chief executive officer Ben Thompson says the strong growth, achieved despite the challenges of the pandemic, demonstrates the vital role of small business to the economy.
“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 pressure at play,’’ Thompson says.
“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.’’
However, he warns the pace of growth is now slowing, with wages increasing 0.5 per cent for the month of July.
SMALL PAY RISES STILL COMING
Danny Lessem, chief executive officer at HR software company ELMO, believes small wage increases will continue for all employees in coming months.
ELMO’S own quarterly Employee Sentiment Index shows more than half of Aussie workers anticipate a pay rise within the next year but Lessem says any increases are unlikely to cover burgeoning living costs.
“On the one side, we have record unemployment which you would think is halcyon days for employees but, on the other side, you have this perception of economic deterioration and huge inflation – it’s a difficult time,’’ he says.
“Employees can negotiate a pay rise but they need to be reasonable with their expectations.
“Even if you are getting pay rises, you are still likely to be on the back foot (with inflation outstripping wage growth).’’
REAPING REWARDS
Securing a five per cent pay rise just weeks before the first interest rate hike earlier this year provided peace of mind for small business worker Morgan Chance.
The solution consultant joined Digital Fusion in 2016, after a commitment from the software company to regularly review his performance and adjust his salary accordingly.
Before his April review, his last pay rise was 11 per cent. Chance now earns 30 per cent more than when he started.
Chance believes small businesses are much better at rewarding staff than larger companies, which he says are constrained by pay grades and remuneration protocols.
“A 2.5 per cent pay rise (in keeping with average pay increases) would still have helped but it would be a lot tighter squeeze on the cost of living – effectively going backward with inflation,’’ he says.
“I’m now five per cent over the (salary) goal I started with.’’
Nevertheless, Chance says unexpected school expenses for his three children mean the household budget is a “moving target’’, forcing his family to change their spending habits due to the cost of living.
“There are always expenses coming up and opportunities for the kids to engage in this and that activity, hobby or learning experience,’’ he says.
“It’s tough and you feel like a meanie or a bad parent if you can’t provide for all the opportunities for growth out there. But they never end.’’