Bosses still reluctant to increase wages to retain staff despite increase in business confidence
Wed 24 July 2019 - 10:46 amNews
Business confidence is returning but a new survey shows many bosses still aren’t willing to lift wages to retain talented staff.
Bosses at small and medium-sized businesses believe the economy is turning around after a year of plummeting confidence.
But the new survey of chief executives also shows they expect wage growth to stay low, with companies using “non-financial” means to retain talented staff.
The Executive Connection polled 251 chief executives and business owners about the economy just after the Reserve Bank slashed interest rates to a record low of one per cent.
“Following the federal election, business leaders’ confidence is being buoyed by the recent reduction of interest rates, strong equity markets and some better signals emerging in the housing market,” Executive Connection chief economic adviser Warren Hogan said on Tuesday.
“Combined with the income tax cuts due in the months ahead, we could well be at the turning point for the Australian economy.”
The survey shows expectations for the next year are positive for the first time since last year.
“At the very least, it appears that the deterioration in economic activity witnessed since the middle of 2018 has been arrested,” Mr Hogan said.
“The probability of Australia drifting into recession has diminished on the back of political certainty, lower interest rates and the buoyancy of financial markets.”
But while businesses face challenges keeping talented staff, they are not prepared to offer more money.
The report said for 87 per cent of business leaders, attracting and retaining employees is the top talent challenge.
But 44 per cent of bosses are planning to offer flexible working conditions over more money, with just 21 per cent looking at increasing wages.
About a third of businesses are also looking automation as labour becomes harder to find.
“Talent is consistently a top challenge for CEOs of mid-sized organisations and many are indicating that throwing money at the problem is not proving sustainable or effective in attracting and retaining highly skilled workers,” The Executive Connection chief executive Stephanie Christopher said.