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Wage growth in SMB sector outpaces official figures, reveals Employment Hero
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Wage growth in SMB sector outpaces official figures, reveals Employment Hero
In a surprising revelation that challenges official statistics, the latest data from Employment Hero has highlighted a significant wage growth in Australia's small and medium business (SMB) sector. According to Ben Thompson, CEO and co-founder of Employment Hero, wage increases in this sector are outpacing the figures reported by the Australian Bureau of Statistics (ABS).
Wage growth in SMB sector outpaces official figures, reveals Employment Hero
In a surprising revelation that challenges official statistics, the latest data from Employment Hero has highlighted a significant wage growth in Australia's small and medium business (SMB) sector. According to Ben Thompson, CEO and co-founder of Employment Hero, wage increases in this sector are outpacing the figures reported by the Australian Bureau of Statistics (ABS).
"While ABS figures may show wage growth hovering around 3.4% for the private sector, the latest Employment Hero data shows those figures are much stronger for the SMB sector, which represents 99% of all Australian businesses," Thompson explained. "Across the hundreds of thousands of small and medium businesses on the Employment Hero platform, wages are up 5.3% year-on-year."
The data underscores the unique pressures faced by small businesses as they strive to remain competitive in a challenging labour market. "Small businesses are paying more because they have to," Thompson continued. "They're competing for talent against larger employers with deeper pockets and in a labour market that's still tight in pockets like manufacturing, science and technology."
One of the most notable findings from Employment Hero's data is the demographic experiencing the strongest wage growth. Contrary to the common perception that younger workers benefit most from wage increases, it is actually older employees who are seeing the largest gains. Thompson noted, "What's particularly striking is where the wage pressure is strongest. Workers aged 55 and over are seeing the biggest gains at 5.9% year-on-year, flipping the common assumption that wage growth favours younger workers."
This trend suggests that experience and judgement are increasingly valued by employers, particularly as they seek individuals capable of navigating complexity independently. "Experience and judgement are commanding a premium, particularly as employers look for people who can navigate complexity without hand-holding," Thompson said. Meanwhile, the influx of young people entering the workforce is helping to ease pressure on starting salaries, offering some relief to employers concerned about escalating wage costs.
The findings come at a time when economic conditions are becoming more challenging for businesses across the board. With the Reserve Bank of Australia (RBA) recently raising interest rates to 3.85%, companies are grappling with rising costs and the prospect of sustained higher rates. "Coming off this month’s rate rise to 3.85%, today's number puts employers in an increasingly difficult position," Thompson observed. "Wages are growing faster than official figures suggest, costs are rising, and the RBA is signalling rates will stay higher for longer."
This situation presents a complex landscape for small and medium businesses, which form the backbone of the Australian economy. As they navigate these challenges, the need to attract and retain skilled workers becomes ever more crucial. The higher wage growth in the SMB sector reflects the intense competition for talent and the necessity for smaller businesses to offer competitive compensation packages to attract and retain skilled employees.
The Employment Hero data provides a valuable lens through which to view the current state of the labour market, highlighting the distinct pressures and opportunities faced by different segments of the workforce. As the economic environment continues to evolve, these insights will be crucial for policymakers, businesses, and employees alike.
In summary, the latest findings from Employment Hero reveal a dynamic and competitive landscape for small and medium businesses in Australia. With wage growth outpacing official figures, particularly among older workers, these businesses are navigating a complex environment shaped by rising costs and a tight labour market. As they adapt to these challenges, the emphasis on experience and skill continues to shape the future of work in the SMB sector.
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