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Small businesses are the lifeblood of the economy. This means the latest reports showing that they aren’t hiring is a worrying sign.
Recent data from the Australian Bureau of Statistics (ABS) revealed that in the December quarter of 2023, there was a 1.9 per cent decrease in employing business. This totalled a concerning 19,161. Meanwhile, there was a 0.8 per cent increase in non-employing businesses, totalling 12,837.
According to Entrepreneurial and Small Business Women founder and chief executive Amanda Rose, a non-employing business “refers to a business that does not have any paid employees (but may contract people instead). These businesses are typically run by a single person or a partnership without any additional staff. This can include sole proprietors, freelancers, contractors, and family businesses that operate without hiring employees.”
Compounding the lack of hiring is an overall decrease in businesses, with the ABS data noting a 0.2 per cent decrease, equating to 6,324 organisations. Meanwhile, the entry rate trails the exit rate. There were 131,616 entries (5 per cent) and 137,940 exits (5.3 per cent).
These statistics are concerning for the future of small businesses and the wider Australian economy. Small businesses are responsible for employing more than 5 million people, or 42 per cent of the private workforce.
Ms Rose continued: “The data highlights a worrying trend that has widespread implications for the health of our economy and overall consumer wellbeing. A decrease in the number of businesses suggests unfavourable operating conditions, especially for smaller players like family-run operations and fledgling start-ups.”
“If we want our community to thrive, we need to do more to support small businesses. At the very least, this new data should warrant further investigation and early intervention before non-employment businesses become an entrenched pattern.”
Championing small businesses is the responsibility of all Australians. We run the risk of crippling the economy and leaving a significant portion of our workforce out of a job if these trends continue.
“Supporting small businesses is critical for the health of the economy. The small-business sector is the single biggest private employer of Australians and is responsible for providing around 5 million Aussies with jobs. It is the backbone of the economy and a source of innovation. When small businesses do well, the economy is strengthened, there is a more robust job market, and communities thrive,” commented Ms Rose.
So, what can be done to prevent the under-hiring of workers and the continued closure of small businesses? According to Ms Rose, several things:
“Legislate protection for businesses who are contracting that they aren’t considered employees as it will stunt the growth of a small business. Reduce the tax burden for small-business owners to assist with cash flow,” said Ms Rose.
“Reduce red tape to make it easier for small businesses to operate. Offer training programs and resources to help small-business owners and their employees develop the necessary skills for growth and adaptation.”
She concluded: “Dedicate a proportion of government suppliers to small-business owners and change requirements to ensure they aren’t left out of the procurement process due to the cost involved with key things such as insurances. Audit government-funded programs that are designed to support small businesses and entrepreneurs and ensure they are delivering on helping a business grow and become profitable.”
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The practice of actively seeking, locating, and employing people for a certain position or career in a corporation is known as recruitment.
Jack Campbell
Jack is the editor at HR Leader.
