16/02/2021 - 14:00

Staff issues for regional business

16/02/2021 - 14:00

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Many of Western Australia’s small businesses carried a high degree of optimism into 2021, according to findings from the new 2020 BCEC Small Business Survey.

Staff issues for regional business
More than four in 10 regional small business owners had trouble filling job vacancies during COVID-19. Photo: Louis Hansel

Many of Western Australia’s small businesses carried a high degree of optimism into 2021, according to findings from the new 2020 BCEC Small Business Survey.

Coming into 2021, more than a quarter of small businesses in WA intended to hire additional workers over the next six months, despite most small business owners expecting no further extension of JobKeeper beyond March.

However, WA’s regional small business community also reported skills shortages as a significant challenge to these aspirations, according to the BCEC survey, released by the Bankwest Curtin Economics Centre last week.

Share of businesses that report difficulties sourcing labour: by WA region

More than four in 10 regional small business owners had trouble filling job vacancies during the COVID-19 pandemic, including nearly a quarter who found recruitment to be a lot harder.

Skills shortages proved especially acute in the Pilbara, where nearly 80 per cent of small businesses found it hard to source workers, along with more than half of businesses in Goldfields-Esperance and the Kimberley.

Regional small businesses working in the manufacturing, accommodation and food services sectors were among the hardest hit, with more than half reporting they couldn’t find enough workers.

A number of factors are at play here, with evidence suggesting that the local supply of workers can’t keep pace with the rise in economic activity coming from the resources sector.

Interstate and international border closures restricting labour mobility are having an impact, as is the significant stimulus in the construction sector.

There are also concerns that higher JobSeeker payments are acting as a disincentive for some to find work, and that JobKeeper subsidies are restricting worker mobility.

The challenges experienced by WA’s small business sector in filling vacancies comes at a time when skills shortages and low population growth are posing a real threat to Australia’s economic recovery, with business groups now putting pressure on the Commonwealth government to act.

Indeed, Reserve Bank of Australia governor Philip Lowe has recently flagged the risks posed to Australia’s economic recovery from slower population growth.

Federal parliament’s joint standing committee on migration has just been commissioned to come up with solutions to help businesses get the staff they need, and to review the ease with which prospective migrants can access skilled visas to enter the country.

In the interim, more work needs to be done to incentivise labour mobility and ensure that workers have job security and adequate wages.

This month’s snap lockdown in WA has been a wake-up call for many, and a warning that 2021 won’t necessarily be plain sailing.

Thankfully, the shutdown measures in response to WA’s first community transmission of COVID-19 in almost 10 months have been relatively short. However, businesses still had to shut down, leading to more revenue losses, more workers going without pay, and diminishing cash reserves (most with no JobKeeper to fall back on).

It’s clear that further shutdowns will severely test the financial resilience of many small businesses, especially if they drag on for longer than a week or a fortnight.

Small businesses will need to build financial security into their business plans, they will need to accumulate cash reserves, and they need to be paid on time.

A case can also be made for an ongoing emergency temporary wage subsidy to give confidence to businesses seeking to hire new workers, and to support them through any extended shutdowns in the future.

• Professor Alan Duncan is director of the Bankwest Curtin Economics Centre.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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