Industry calls for govt leadership in tough economic times

Escalating operating costs have been flagged as the key challenge this year for Australian business leaders, according to data from a new research report. Ninety-two per cent of senior decision-makers say their business will take measures to manage costs and handle inflationary pressures.

The ‘Australian Business Leader Pulse Check: Business Growth, Workforce and Hiring’ report comes from Deel and YouGov and finds that businesses are looking for new ways to retain talent amid the ongoing skills shortage, while employee-related costs surge, driven by inflation.

Constrained by these pressures, 47% of the senior business decision-makers surveyed said they will either not be offering a pay rise in 2023 (14%) or will do so for only some employees based on their performance (33%). For some businesses, the pressure to cut costs is hitting hard, as close to two in five (38%) business leaders said their business expects to lay off staff in 2023.

International expansion and workforce mobility appear to be areas of growth and opportunity for Australian businesses. Forty per cent of respondents from Australian companies of five or more people indicated that their businesses currently have a mobility option to allow staff to work abroad. Moreover, 16% said they had such a plan currently being developed or rolled out.

Additionally, 61% of research respondents indicated that their organisations plan to expand into new markets in the next two to three years. However, hiring staff in target markets was identified as a top challenge to international expansion by 41% of the senior business decision-makers polled.

“Businesses in Australia are not only aware of the benefits of flexible work and a global perspective on finding and keeping talent, but are clearly embracing it,” said Shannon Karaka, Country Leader, Australia and New Zealand, Deel.

“As talent challenges in the local market mount, a global approach to hiring represents a path forward for Australian businesses looking to buck the local market trends and go for growth.

“The research showcases just how prevalent an international strategy has become among organisations in Australia, and local businesses are fast adopting a recruitment and employee management approach to match. Data from Deel’s global hiring platform is further proof of this trend, with Australia leading APAC for fastest growth by organisations’ rate of hiring and number of organisations hiring as shown in our most recent global hiring report,'' Karaka said.

The research reveals how companies in Australia are managing costs in an inflationary environment and dealing with a talent shortage in a tight labour market. It also examines how Australian businesses are approaching post-pandemic workforce challenges and looks at what local executives think should be done at a government level to address them in Australia.

Key findings include:

Managing costs amid inflation

• 92% of senior business decision-makers said their businesses will take measures, like reducing overheads (32%), to manage increases in costs and inflation in 2023.
• 38% of respondents said that their businesses are planning for layoffs in Australia in 2023, with 15% saying this will impact 10–20% of their staff.
• 75% of respondents indicated their businesses will take measures related to staff, including 32% who plan to review or reduce overheads and 20% who expect to consolidate departments and/ or functions.
• Nearly half (47%) of those surveyed said there would either be no pay rises in the business this year (17%), or that only some employees would receive pay rises based on their performance (40%).

HR challenges

• 96% of business decision-makers surveyed indicated their HR teams were facing challenges in 2023.
• 28% suggested wage increase pressures were a top challenge for HR teams, followed by:
  • Flexible work requests (26%)
  • Workforce transformation (26%)
  • Talent retention (25%)
  • Maintaining and/or increasing productivity (25%)
  • Talent sourcing (24%)
  • Finding and keeping pace with latest technology for HR needs (21%)

The rise of the mobile workforce

• 40% of respondents indicated that their businesses already have mobility plans in place, while 16% indicated that they had such a plan currently being developed or rolled out.
• Respondents from medium-sized (62%) and large enterprises (70%) were more likely than those in small enterprises (28%) to say they had a mobility plan in place or being rolled out.
• However, business decision-makers from small enterprises (27%) were more likely than those in medium (15%) and large enterprises (16%) to say they are considering setting up a mobility plan in the future.

International expansion

• 61% of survey respondents indicated that their organisations are planning to expand to new markets in the next two to three years.
• Among those companies considering an international market in the coming two or three years, Singapore is the most common target market for expansion, with 26% of respondents naming the city-state. Other top target markets were the United States (23%) and the United Kingdom (21%).
• Supply chain and logistics were named as top challenges to businesses expanding into other markers by 42% of respondents, followed by:
  • Hiring staff in the target market (41%)
  • Compliance with local regulations such as labour and tax laws (37%)
  • Cashflow or funding (37%).

Government leadership

Grants to adopt digital tools were identified by 35% of respondents as the most important initiative that the Australian Government could instigate to support businesses in Australia at present, followed by:

• Reducing import taxes and tariffs (34%)
• Ensuring the migrant worker visa process was more streamlined, with less red tape (33%)
• New contract worker regulations (30%)
• Bringing back instant asset write-offs (30%)
• Tax incentives for expats (28%)
• Raising the migration cap again (24%)
• Removing labour market testing (23%).

Image credit: iStock.com/JLGutierrezOK