31/03/2011 - 10:47

Labour shortages challenge WA businesses

31/03/2011 - 10:47

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New research shows that more than half of WA employers believe that labour shortages and associated wage pressures are the biggest challenges to their businesses this year.

New research shows that more than half of WA employers believe that labour shortages and associated wage pressures are the biggest challenges to their businesses this year.

With the WA economy expected to pick up pace later in the year, the ability of local businesses to attract and retain workers will only get worse.

Labour availability has been the biggest worry for employers for a number of years. The latest Commonwealth Bank - CCI Survey of Business Expectations reveals that 30 per cent of respondents rated it as their number one concern for 2011, compared to 23 per cent last year. Almost 60 per cent rated it as one of their top three issues.

Firms are also increasingly worried about the impact this will have on their wages bill. One quarter of employers identified rising wages as their biggest issue, compared to 19 per cent last year. Nearly three quarters of employers rated it as one of their top three priorities.

CCI Chief Economist John Nicolaou said, "These results are a further reminder to government that urgent action is needed. The State Government must implement its recently released strategies to grow the workforce. But they can't do it alone. Many of the answers to this problem lie with the Federal Government, such as the creation of more flexible migration programs and less burdensome industrial relations laws ."

Other issues to rank highly amongst WA businesses included borrowing costs, taxation levels and industrial relations.

Meanwhile, there are a number of other cost pressures facing business which has resulted in the short-term confidence of WA employers falling further.

The survey shows short-term business confidence fell again with only a quarter of respondents expecting conditions to improve in the next three months. 14 per cent expect the economy to weaken.

The ongoing worries about the prospects over the next quarter reflect the mounting cost pressures eroding the bottom lines of business. Around half of all respondents have had to contend with rising materials and supplies costs. Almost half said they have also been hit by rising wages, indicating that severe labour shortages are starting to bite.

On the other hand, long-term confidence has improved sharply, returning to near-record highs. Almost 60 per cent of WA businesses expect the economy to improve over the next twelve months, up from half of respondents last quarter.

As a result, around one third are planning to invest to expand and hire more people in the coming months so they are ready for the upturn.

Businesses have been reluctant to pass on the rising costs to consumers, which has meant that almost 40 per cent reported a drop in profits.

Greg Caust, General Manager Corporate Financial Services WA at the Commonwealth Bank said, "As the broader business community waits for increased revenues to arrive, forward planning will be particularly important and businesses will need to be thinking about effective risk management strategies in order to weather the cost pressures that lie ahead."

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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