2019 is shaping up to be a good year for West Australian workers, with WA businesses expecting to take a hit on profits to expand their business, hire more people and increase wages.
The latest WA Super–CCI Business Confidence Survey conducted by WA’s peak business body, the Chamber of Commerce and Industry WA (CCI), is the only WA-specific index in the country, providing a snapshot of state-wide economic conditions and business expectations.
CCI Chief Economist Rick Newnham said WA businesses have set the tone for 2019 as one of continued optimism, with more than 10 times the number of optimistic businesses than that of three years ago in June 2015 when only 5 per cent of businesses expected conditions to improve.
“Businesses are expecting to take a hit on their profits to invest more, hire more people and pay higher wages in 2019,” Mr Newnham said.
“Employment opportunities are on the rise, with 35 per cent of businesses expecting to increase their workforce in the next three months and 43 per cent expecting labour costs, including wages, to increase.
“Eighty-five per cent of businesses are expecting to increase or keep their production levels steady in the short-term and around 30 per cent of businesses are planning to increase their business investment in the current and next quarter.
“Just 18 per cent of businesses expect higher profitability next quarter while costs and investment continue to grow. This means business owners are taking the hit to benefit the wider economy.”
Overall, the mining sector continues to lead WA’s boost in confidence, with four out five businesses (78%) expecting stronger economic conditions in the next 12 months and one-third (33%) expecting to grow their business in the next quarter.
“This is however already presenting challenges for businesses requiring skilled workers, with job ads in the mining, resources, and energy industry increasing by 23 per cent in the year to October 2018 – the highest growth in any industry across the country,” Mr Newnham said.
“It’s vital the State Government acts now to develop a long-term plan to rebuild the State’s skills base as the economy picks up. This includes increasing access to skilled migration when businesses can’t find the right skills locally.
“Almost 60 per cent of business owners earn $50,000 or less. Many small business owners are struggling with low demand for their goods and services as much as workers are struggling with slow wages growth.
“If the State Government wants to kick-start employment and wages growth in WA it should increase the payroll tax threshold, which is one of the lowest in Australia and is the reason why WA has the highest payroll tax burden of any state. There is no coincidence that WA is the most expensive place to create new jobs and continues to have the highest unemployment rate in the nation.”
WA Super Chief Executive Officer Fabian Ross said the results of the survey are promising as WA businesses look to increase capital expenditure.
“We believe this will benefit the WA economy as businesses set themselves up for growth opportunities. Perhaps now is a good time for organisations to reassess their financial well-being programs as part of their overall employee value proposition,” Mr Ross said.
To read our WA Super–CCI Business Confidence Survey click here.