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Employment Hero calls for an end to rate hikes after payroll data showed easing pressures in the labour market.
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SME wages fall for first time in 6 months
20 December 2023
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9 minute read
SME wages fell last month for the first time since May in a sign of a cooling economy, said payment platform Employment Hero, calling for an end to RBA rises in the near term.
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Its latest SME Index found a 0.3 per cent decline in wages from October to November, after six months of wage stagnation in the sector.
Chief executive Ben Thompson said the data, gathered from 150,000 businesses and 1.5 million employees, showed wage growth was flattening to align with inflation.
“After months of slowing, wages in Australia’s SME sector have decreased for the first time in six months,” he said.
The RBA kept the cash rate unchanged at 4.35 per cent this month after a series of 13 hikes since May last year.
“The RBA must consider halting interest rate increases for at least the near term,” Mr Thompson said.
The industries that experienced the biggest monthly drop in wages included healthcare and community services (-0.7 per cent); science, information, and communication technology (-0.5 per cent); and manufacturing, transport, and logistics (-0.4 per cent).
Wages in medium and larger enterprises decreased by 0.4 per cent and 1.4 per cent, respectively, offsetting a 0.6 per cent increase in smaller enterprises.
Median wages for workers aged between 25 and 24 decreased by 0.01 per cent while 18–24-year-olds and workers under 18 saw a 0.3 per cent and 0.6 per cent increase, respectively. Wages for workers over 65 remained unchanged.
Mr Thompson said the data indicated the economy would continue to cool into 2024 and could even enter a “small” recession, which would prompt SMEs to cut back on hiring and growth plans during the middle of the year.
Data for new hires were mixed among industries, Employment Hero said. Employment for SMEs in construction and trade services, as well as those in science, information, and communication technology services, decreased by 0.01 per cent.
Retail, hospitality, and tourism SMEs experienced the biggest monthly growth in employees at 0.2 per cent, but workers experienced a significant dip in median hours worked.
Workers received 1.4 per cent fewer hours year on year and 3.2 per cent fewer hours compared to last quarter, Employment Hero said. It predicted the retail sector would experience a “mild Christmas as the cost of living bites” as a result.
“Workers in these industries are receiving fewer hours compared to this time last year, perhaps in response to weakened in-store foot traffic,” it said.
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