Wages in Australia’s SME sector have declined month-on-month (MoM) for the first time in six months, according to the latest Employment Hero SME Index.
The monthly median hourly rate decreased by 0.3% from October to November. Interestingly, says Employment Hero, smaller enterprises saw a 0.6% increase while medium and larger enterprises dropped by 0.4% and 1.4%, respectively.
South Australia (up 0.1%), Victoria (up 0.2%), and Tasmania (up 0.3%) were the only states with an increased median hourly rate MoM.
For 18-24-year-olds and 25-64-year-olds, MoM median rates increased by 0.3% and decreased by 0.01% respectively, while median rates for under 18-year-olds saw a 0.6% increase as 65-plus-year-olds remained unchanged. The median hourly rate for employees working in Australian SMEs is now $37.77, $0.19 less than the previous month.
“After months of slowing, wages in Australia’s SME sector have decreased for the first time in six months,” says Employment Hero co-founder and CEO Ben Thompson.
“As the data shows wage growth is flattening to align with inflation, the RBA must consider halting interest rate increases for at least the near term.”
Employee growth
Average employee growth has increased only marginally (up 0.04%) MoM within the SME sector, with growth varying across states and territories.
SMEs in the Northern Territory saw the biggest decline at 0.2%, while the ACT and Queensland saw a decrease of 0.1%.
SMEs in Victoria showed a 0.04% rise, while Tasmania, NSW, and West Australia experienced an increase of 0.1%. SMEs in SA saw the largest monthly increase of 0.2%.
Employee growth also varied among industries from October to November, with SMEs in retail, hospitality and tourism increasing the most at 0.2%.
Working hours
Although median hours worked increased by 1.3% year-on-year (YoY) across Australian SMEs, most industries recorded a YoY decline except for science, information, and communication technology, which saw no change.
The retail, hospitality, and tourism sectors saw the most significant dip, declining 1.4% YoY and quarterly at 3.2%. Employment Hero believes this suggests workers in these industries are receiving fewer hours compared to this time last year, perhaps in response to weakened in-store foot traffic.
“[The] critical alignment of wage growth with inflation and an ongoing decline or slowing of average employee growth in SMEs marks a potential turning point in the nation’s economic trajectory,” says Mr Thompson.
“Our data indicates that the economy will continue to cool off as we head into 2024 and it’s likely mid-next year, we’ll see SMEs cutting back on hiring and growth plans as the economy potentially enters a small recession.”
