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The Reserve Bank of Australia (RBA) announced the cash rate rise earlier this week, with many unsurprised by the increase. This decision could have effects on small businesses in the lead-up to Christmas.
The RBA has opted to raise the cash rate by 25 basis points to 4.35 per cent. According to Employment Hero, this decision “is likely to usher in a newfound period of low consumer confidence,” with small to medium businesses (SMEs) expected to be hit hard.
“The RBA announcement today had the power to make or break Christmas for Australia’s SMEs, and regrettably, with interest rates now set to rise, we are likely to see growth drop off over the summer trading period,” said Employment Hero chief executive Ben Thompson.
“We were already expecting seasonality hiring to reduce as businesses seek to recoup losses, so the RBA’s rate rise of 25 basis points will no doubt be a kick in the guts for our small business community.”
This is a tough time of year for many employers and employees. Coinciding with the cash rate rise is the lead-up to the Christmas period, where spending is ramped up. The cost-of-living pressures add further burden, and Mr Thompson believes that with these issues, businesses may look to downsize staff levels.
“With already thin or shrinking profit margins, Australian SMEs face even greater financial burdens coming into the end of the year. Not to mention that Australian workers already grappling with the rising cost of living now must face the possibility of reduced job opportunities and hours as businesses scramble to adjust their plans and budgets,” Mr Thompson explained.
“A move from the RBA to seemingly aid economic stability could realistically result in significant instability for our small-business community and its workers.”
This news could be disheartening for many smaller businesses, especially after the recent growth many have experienced. According to the Employment Hero SME Index, on average, Aussie SMEs saw employment growth of 0.3 per cent in the month of September. Meanwhile, since September 2022, the average employment growth was 6.6 per cent for SMEs across the country.
The recent cash rate rise could see this progress lost as pressure tightens. With Employment Hero predicting downsizing as a response to the RBA’s decision, many SMEs may struggle as we approach the holiday season.
For employees who may be worried about the potential for extra work over this period, Bitrix24 provided some tips on how to stay productive over Christmas:
- Stick to your daily routines as much as possible.
- Set a distinct focus and clear goals for the month.
- Choose the holiday traditions you love; skip the rest.
- Have an alternative ready for invitations.
- Take care of yourself.
- Leave yourself clear directions.
- Party when it’s party time.
Jack Campbell
Jack is the editor at HR Leader.
