Small businesses should budget for a 4.1% pay increase: AIM survey

Small and medium-sized businesses are planning to increase staff pay by 4.1%, according to the 2013 Australian Institute of Management National Salary Survey published today.

The survey, which is in its 49th year, defines SMEs as businesses with up to $10 million in annual turnover and found the pay increases planned were higher than those for larger companies, which are budgeting in a 3.9% wage increase.

Downward pay trends are forecast to continue for all states, most notably in Western Australia.

Of the 478 businesses surveyed, AIM found 49.3% of SMEs are planning to increase their permanent staff numbers, an increase on 45.9% last year.

Matt Drinan, head of research for AIM in NSW and the ACT, told SmartCompany SMEs are facing continued pressure from both the labour market and business activity.

“It’s starting to look a little bit tighter and things could be tougher. It has been very much an employees’ market up until now, but there might not be as much movement coming up,” he says.
According to the survey, difficulties are most commonly being found recruiting at the professional and technical job level and for technical and trade, sales and marketing and construction and engineering job functions.

The survey found 29% of SMEs employ staff from overseas, but it is looking like fewer will need to use overseas workers in the coming year.

This compares with a notable upward trend in the number of larger businesses, with over half reporting they already employ overseas workers.

In larger businesses the number which would consider hiring staff from overseas in order to fill skills shortfalls was also down from last year, which suggests this trend may have reached its peak.

“The need to fill from overseas in terms of skill shortfalls may be falling, as that skill gap is not quite as big an issue as it was last year and the increased cost of the 457 visa may also impact on that,” Drinan says.

He predicts there is likely to be a further decrease in the number of employers that will consider hiring overseas workers.

Instead, SMEs are seeking to attract local workers by offering increased flexibility for employees.
The survey found 75.7% of SMEs offer flexible work arrangements to senior management and the proportion of small companies that offer flexible work arrangements at all levels has increased.

“This is a good thing as smaller businesses can’t often afford to keep paying what their larger counterparts can, so by offering more flexible arrangements they can make more attractive offers,” Drinan says.

“As skills gaps are still being experienced across a range of industries, it might be wise for employers to look at developing existing staff to help fill skill gaps within their business.”