Small Medium Enterprises hold off on hiring new staff

Small Medium Enterprises hold off on hiring new staff

not hiringThe increasing pace of recovery and strong business confidence is not likely to translate into a significant number of new jobs in the SME sector this year, a new study shows. But more businesses are planning to keep the staff they’ve got.

The proportion of small-to-medium enterprise (SME) employers intending to take on new staff in the year to February 2014 is just 8 per cent, according to an analysis of employment intentions by business services firm MYOB.

A recent ANZ Bank survey showed New Zealand confidence at its highest since early 1999 and pointing to annual economic growth of close to 4 per cent by the end of the year.

The bank survey result was up because of high house prices, low interest rates, high dairy prices, rising net migration and the Christchurch rebuild, as well as a relatively stable global picture.

But the MYOB business monitor showed the number of SMEs intending to hire staff in the following year had fallen from 11 per cent in 2011 and 11 per cent who said the same in 2012.

However, the number intending to keep existing staff levels rose from 66 per cent over the previous two years, to 72 per cent in 2013.

MYOB New Zealand business division general manager James Scollay said the local SME job market had remained fairly stable over the post-recession period.

“This is good news for the around one-third of all New Zealanders employed by a small-to-medium business owner, giving them confidence about their employment prospects,” he said.

“This should translate into stable consumer spending and investment.”

However despite a growing confidence across the SME sector, what the country had not seen yet was a significant improvement in employment intentions. In fact, fewer employers expected to take on new staff in 2013.

“In times of uncertainty, it’s natural for business owners – especially those with no or few employees – to bunker down rather than lift their investment in people,” Scollay said.

“The state of the local economy directly impacts their confidence in the future of their business and they take less risk in investing in new staff members.

“This has obvious ramifications for the broader public given the proportion of New Zealanders who are, and could be, employed by SMEs.”

Scollay said the first signs of improvement in the SME employment market appeared to be emerging among mid-sized businesses.

“While employment intentions among businesses with fewer than 20 employees have fallen in the last year – particularly among small businesses with between 6 and 19 employees – more and more mid-sized businesses are looking to take on staff,” he said.

This was positive because the growth of mid-sized businesses tended to flow through to the many SMEs they worked with.

Scollay said taking on staff could be a major step for smaller businesses, as the employment process increased the number of compliance issues they had to deal with.

“As a country, we need to focus on ways to make dealing with taxation and employment as easy as possible for SMEs,” he said.

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