NSW SMEs hit hardest by rising wages and red tape costs
Rising wages and compliance costs top the list of growing cost pressures for Australian SMEs, with small and medium businesses in NSW the most heavily impacted.
The findings were contained in the latest round (Q1, 2023) of the bi-annual SME Growth Index by ScotPac, Australia’s leading non-bank business lender.
Asked to name the top three areas of rising business costs today, 67% of SMEs in NSW nominated higher wages, compared to 61% for the rest of the country.
Compliance costs were the next highest rated by SMEs in NSW at 60%, compared to 53% for other markets.
Transport and logistics expenditure rounded out the top three areas of cost rises across the nation, with 51% of SMEs listing this area as a growing pain point.
| Top 3 fastest rising business costs | NSW | Rest of Market |
| Labour / Wages | 67% | 61% |
| Compliance costs | 60% | 53% |
| Transport / distribution / logistics | 49.5% | 51% |
Job cuts and longer working hours lead price rise strategies in NSW
The headline strategies SMEs are adopting to combat rising cost pressures are likely to raise alarm bells for politicians and policymakers, particularly in NSW. The top three are:
- Reducing workforce: 62% of SMEs in NSW were reducing their headcount, compared with 52% across the rest of the market.
- Increasing working hours: 59% of SMEs in NSW were increasing their working or operating hours, compared with 54% across the rest of the country.
- Downsizing their business: 34% of SMEs in NSW were planning to downsize of reduce sales volumes, compared to 41% in other States & Territories.
ScotPac CEO, Jon Sutton (pictured), said the findings provided a clear picture of the challenges SMEs are facing to whichever party forms Government in NSW after the March 25 election.
‘SMEs account for 98% of all businesses across Australia and, as our largest State, NSW SMEs are the engine room of our national economy,’ Mr Sutton said.
‘As wages rise, SMEs are feeling the pinch and taking action to reduce their operating costs, particularly in NSW where cost-of-living pressures are the most acute in the nation.
‘There is a golden opportunity for the next NSW Government to take a razor to the red tape and bring down compliance costs for hundreds of thousands of SMEs.
‘With targeted policies that cut the cost of doing business, further job losses can be stemmed, and NSW SMEs can remain competitive with their interstate counterparts.’
ScotPac has been assisting business owners with tailored finance solutions at every stage of the economic cycle for more than 30 years.
‘We have the breadth of product to help more businesses in more situations than any other non-bank lender,’ Mr Sutton said.
‘Many SME owners and operators are not aware of the opportunities that exist to unlock the value of their assets and contracts to fund growth or manage operating expenses.
‘We would encourage all SMEs to talk to their advisors about how ScotPac could assist their business.’
