SME recruitment activity decreases when hourly rates increase

The latest figures from the Employment Hero SME Index show that net employment growth in December fell 0.3 percent from the previous month, while median hourly wages rose 1.2 percent after a two-month lull.

Overall, the average headcount of Australian SMEs in December 2022 was 20.7 points higher than in January 2019 when the index was first compiled, but growth from November to December 2022 fell by 0.3 points.

Employee growth also declined month-on-month across all industries, with SMEs in construction and trade seeing the largest declines, down -0.4 percent, and healthcare and communities the smallest, down -0.2 percent. Retail/Hospitality/Tourism, Manufacturing, Transportation & Logistics, and Science/Information & Communication Technology all declined -0.3 percent.

After staying flat for two consecutive months, median hourly wages rose 1.2 percent since November, rising to $35.42 in December. Average hourly wages also rose from month to month in all sectors.

But while workers at small and medium-sized firms experienced this median wage growth, workers at larger firms saw a 0.5 percent decline. And as the median rate for workers aged 25-64 (+1.1 percent) and 65+ (+2.1 percent) increased month-on-month, it fell for those under 18 (-7.5 percent) and 18-year-olds back to 24-year-olds (-2.3 percent).

“NAB’s Business Confidence Index rose slightly to -1 in December, but is still below average,” said Ben Thompson, Founder and CEO of Employment Hero. “Our own SME index shows that net employment growth fell by -0.3 percent month-on-month, despite rising by 8.6 percent over the past year. Activity is slowing, but the resilience that business owners are consistently showing will continue to underpin every decision they make. It will be interesting to see how the surge in skilled migrants and expanded visa policies will help alleviate talent shortages and boost monthly headcount growth.

“We can confidently say that once again Australian wages have not lagged inflation, they have exceeded it,” Thompson added. “In December, we hit the highest rate of inflation since 1990, with CPI up 7.8 percent over the trailing 12 months, while our data shows median hourly earnings rose 8.2 percent over the same period. After a two-month lull, median hourly wages rose 1.2 percent across states and territories and industries, which could reflect the holiday season. However, this growth was not factored into the median wage rates for the under-18s or 18-24s, as both age groups saw declines of -7.5% and -2.3%, respectively.”