SMEs especially vulnerable to decline in population growth: Report

Fears of a ‘big Australia’ have been replaced by concerns over declining population growth, with official figures showing a slump in migration and a new survey warning of labour shortages and wage spikes as baby boomers exit the workforce.

The news is particularly worrying for small business, says chartered accounting and business advisory firm PKF, which warns the biggest threat to Australia’s economic recovery is population growth.

Australia’s population grew by 1.6% in the 12 months to September 2010 to 22.41 million, the Bureau of Statistics said yesterday. The growth rate is the lowest since the year ending September 2006, and well below the peak growth rate of 2.2% recorded in the 2008 calendar year.

According to the ABS, preliminary estimates for net overseas migration during the September 2010 quarter were a dive of 41.2% to 42,500 people from the previous corresponding quarter. Net overseas migration accounted for the bulk of Australia’s population growth for the year to September, at 54%.

The collapse in migrant intake has been attributed to falling student numbers and reignited calls for the Federal Government to increase migration numbers in the May budget.
PKF has backed this call, warning declining migrant numbers and the retirement of baby boomers are a “double whammy” for Australia, particularly its small businesses.

Using data from Access Economist, PKF says the resource-rich Queensland, Western Australia and the Northern Territory have experienced the sharpest drop in population growth over the past year. PKF puts Queensland’s population growth at a nine-year low, and says Western Australia’s population growth “stalled fairly dramatically” across 2009.

The ABS figures showed Western Australia recorded the fastest growth rate, at 2.1%, followed by Queensland at 1.8%. Population growth in the Northern Territory lifted 1.3%, below Victoria, the Australian Capital Territory and New South Wales.

Matthew Field, PKF’s national director, enterprise advisers, says while yesterday’s ABS figures are simply a correction from significant migrant growth during 2008 and 2009, the sharpness of the decline has taken people by surprise and ought to be seen in context of the baby boomers who put off retirement during the global financial crisis and will exit the workforce over the next decade.

He warns that small business will be especially vulnerable to a workforce shortage.

“From a small business point of view, we see a clear correlation between slowing population growth and the impact of small business,” Field told SmartCompany.

“With skilled shortages, you’ll find that small business is hit harder.”

PKF is calling for a review of Australia’s immigration policy, and increased population growth to cover the period when boomers retire.

Meanwhile, Federal Treasurer Wayne Swan is tipped to announce measures to increase the workforce participation level of people aged 55-64 years to at least 76%, from the current level of 63%.

According to The Australian newspaper, the government is set to establish an expert panel to look at the “economic potential of older Australians” and will spend $30 million to “significantly up-skill” up to 7,500 mature-age workers.

Australia’s unemployment rate currently sits at 5%, and some economists expect it to fall to 4.5%, with ABS putting the nation’s participation rate was at 65.8% in February.