Western Australia’s labour shortage is proving a heavy burden for businesses across a range of industry sectors, with wage and other labour costs at record or near-record highs and recruitment activity falling to a three-year low.
Western Australia’s labour shortage is proving a heavy burden for businesses across a range of industry sectors, with wage and other labour costs at record or near-record highs and recruitment activity falling to a three-year low.
According to the Chamber of Commerce and Industry of WA’s business expectations survey for the September quarter, 71 per cent of the 344 WA businesses surveyed believe labour shortages are having an adverse impact on their operations.
Only 13 per cent of businesses said labour shortages were not an issue, while 52 per cent said shortages were having a negative effect, and 19 per cent reported a very negative impact.
Businesses in the mining, construction, agriculture and utilities sectors faced the most acute shortage of labour, with 81 per cent of respondents reporting a negative or very negative effect.
These sectors also had the highest recruitment activity, with more than 40 per cent of respondents hiring staff in the quarter.
Labour availability was down for the fourth consecutive quarter to a record low, with more than 76 per cent of businesses reporting labour to be scarce.
This compares with 70 per cent one year ago.
Large businesses were most likely to report acute labour shortages (82 per cent), although they experienced the best operating conditions.
In the services sector, 81 per cent of businesses reported acute labour shortages, but only 67 per cent said this was having a negative effect on operations.
Reflecting the tight labour market, employment activity fell for the second consecutive quarter to its lowest level in more than three years.
Overall, about 29 per cent of respondents recruited staff, with 40 per cent intending to hire more staff next quarter.
Wage costs returned to near record levels in September, with over 57 per cent of respondents experiencing higher costs in the quarter.
Large and medium-sized firms were most affected, as were the manu-facturing and distribution industries.
A further increase in wage pressures was expected next quarter by 57 per cent of respondents.
Labour costs other than wages – including workers’ compensation premiums, staff allowances and non-cash benefits – reached the highest level since the survey began in December 1997.
Around 51 per cent of businesses had higher non-wage labour costs in the quarter, and a similar number expect further increases next quarter.
Capacity utilisation was more than 80 per cent during the quarter and, although this measure eased during the past two quarters, it has remained at more than 80 per cent for 12 consecutive quarters.
This was reflected in capital spending plans, with nearly 35 per cent of respondents expecting to expand their capital stock in the next year.
Mining, construction, agricultural and utilities businesses were most likely to plan an increase in spending (43 per cent).
Other input costs were higher in September, reported by a near-record 63 per cent of businesses.
Manufacturing and services sectors were most affected, at 81 per cent and 67 per cent, respectively.
