The return of severe labour shortages is already starting to affect the confidence of WA employers as the cost of doing business continues to rise, says the Chamber of Commerce and Industry WA.
The latest Commonwealth Bank - CCI Survey of Business Expectations reveals that short-term confidence fell again with less than a quarter of those surveyed expecting conditions to improve in the next three months.
More than one third of respondents said they are finding it hard to get the workers they need, indicating that a return to severe labour shortages is just around the corner.
More than one third of employers expect to hire more staff next year, making the need to grow the workforce more important than ever.
43 per cent of those surveyed were being hit by higher wages during the December quarter, with the survey also showing that one in three businesses found their other staffing costs, such as allowances, are also rising.
Nearly half are also paying more for materials and equipment.
CCI Chief Economist John Nicolaou said that if action is not taken now to address labour shortages, it will drive inflation higher, leaving the RBA no option than to embark on a fresh round of interest rate rises in 2011.
"With WA already an expensive place to do business, any additional costs will hit businesses hard," he said.
The results reveal that the increases are being passed on to customers, with 22 per cent of respondents having raised their prices and a further one third planning to increase prices again early next year.
Damien Otto, Executive Manager at the Commonwealth Bank said WA businesses continue to face an array of challenges within the current economic climate and business owners remain cautious on a number of factors, most notably rising costs.
"What is interesting, however, is that there is a distinct difference between the short and longer-term business outlook," he said.
"This shows that business owners are thinking further ahead in order to remain competitive and increase market share."
Although WA business will finish the year wary about the short term future, the survey shows that almost half are upbeat about the year ahead, pushing business confidence to its highest level since March this year.
