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Rising labour expenses continue to cause stress for NSW small business owners, with wages overtaking energy costs as the main business concern.
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Wages top SME concern list as labour pressures rise
10 December 2024
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Recent research from Business NSW has pointed to wages being the top concern for NSW small businesses, highlighting the building pressure of rising labour expenses.
According to Business NSW, escalating wage pressures signalled shifting priorities among employers as they grappled with a tight labour market.
The latest Business Conditions Survey also identified insurance costs and taxes as some of the main SME concerns.
The first iteration of the survey in 2023 revealed energy costs as SMEs’ main concern. Despite energy costs being knocked from the top three concerns, 80 per cent of respondents said they didn’t expect energy prices to decrease over the next two years.
Business NSW CEO Daniel Hunter said businesses were also feeling the impact of customers negotiating prices and cutting back on spending.
“Businesses are already under pressure from rising operational costs, and now, with delayed payments becoming more common, it’s even harder for them to stay afloat,” Hunter said.
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“Nearly 40 per cent of businesses are now waiting longer for invoices to be settled, which means they have less cash flow to cover their own expenses. For small businesses, this delay could be the difference between staying open or closing their doors.”
Results from the survey also demonstrated that 38 per cent of businesses were facing price negotiations, 30 per cent were seeing more demand for cheaper alternatives and 39 per cent were waiting longer for invoices to be paid.
Business NSW called for the government to refine their SME focus in 2025.
The organisation recommended that the government implement reforms to the emergency services levy to reduce the markup on insurance premiums for SMEs, remove barriers preventing SMEs from communicating directly with the government, and ensure public sector wage increases were matched to productivity gains.
Aside from the research having outlined the main concerns and struggles for SMEs, business sentiments have continued to improve, Hunter noted.
“It’s encouraging to see the Business Confidence Index rebound from -67.8 in September to -54.0 in December,” he said.
“While still slightly below the start-of-year figure, this recovery shows businesses are regaining optimism and adapting to tough conditions, which is a positive sign for future growth.”
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