Queensland businesses secured more staff in the three months to March with employment levels increasing while labour costs are at a record high.
Latest results from the Chamber of Commerce and Industry Queensland (CCIQ) Pulse Survey for the March 2022 quarter show employment levels increased 2.9 index points, while labour costs increased 5.6 index points, with one in two businesses indicating they invested more in wages.
Labour costs are expected to increase again in the June quarter.
CCIQ Policy and Advocacy Manager Cherie Josephson said the data reflected wide-spread labour market and skilled labour shortages across the state and in multiple industries.
“We know businesses have been paying premium wages to attract and retain suitably skilled staff,” Ms Josephson said.
“While March quarter data shows businesses were able to secure more staff, it meant their wage bills increased to a record high of 71.4 index points. The last time labour costs were close to these levels was in 2008.
“Despite this, one in four businesses expect to increase their employment levels in the June quarter.”
The Pulse Survey also indicated business confidence in the Australian and Queensland economies had improved in the March quarter, although was sitting below levels only 12 months ago.
“We know these improved results are off a low base following the December quarter when business confidence declined considerably as a result of COVID disruptions and when many businesses were struggling to find staff,” Ms Josephson said.
Businesses reported retaining and recruiting suitably qualified employees was now the most significant constraint on business growth in the March quarter, while the level of demand and economic activity, and political and economic stability also ranked in the top three constraints.
Ms Josephson said CCIQ were recommending a series of workforce measures ahead of the state budget delivery, including incentives for upskilling in traditional and emerging sectors, methods to reinvigorate the regions through migration and relocation incentives, and improved funding arrangements to support education and training programs. Funding arrangements would also see apprenticeship and traineeship subsidies extended with a focus on future skills needs.
Ms Josephson said seven in 10 businesses also experienced increased operating costs in the March quarter.
“Global supply chain disruptions combined with rising fuel prices have led to significant price rises for business inputs, which are on top of day-to-day business costs such as rent and insurance,” Ms Josephson said.
“Operating costs are trending towards a historical high last seen in June 2017, with many businesses expecting operating costs to increase again in the June quarter.
More than half of businesses indicated their profitability fell during the quarter and, while the March profitability index results have increased, overall levels remain weak, held back with high labour costs and operating costs.
“Capital expenditure however was up 6.7 points, indicating slightly increased investment where three in 10 businesses increased their capital expenditure during the quarter,” Ms Josephson said.
Ms Josephson said while the results showed Queensland businesses had improved confidence in the future of the economy, the increase was off a low base in the December quarter and overall business performance was low.
“While improved, we didn’t see actual growth in the March quarter,” Ms Josephson said.
“We do expect to see growth from the June quarter with general businesses conditions, sales and revenue and employment levels all tipped to increase, however substantially improved profitability may take longer.”
- Business confidence in the performance of the state and national economies over the next 12 months improved after a sharp contraction in the December quarter. The Queensland outlook increased 10.5 index points and national outlook increased 10.4 index points, both considered now satisfactory but not high.
- General business conditions improved 6.2 points in the March quarter as a consequence of better sales leading to partly improved business profitability. The March quarter index (45.0) however remains below this time last year (57.9) and is just above its 10 year average (43.6). The index remains below 50 indicating deteriorating business conditions across the March quarter.
- Total sales and revenue increased 8.1 index points however continues to reflect volatility seen between quarters over the past year. Whilst improving in the March quarter the sales and revenue index (46.9) is below its level at this time last year (57.4) and its 10 year average of 48.2.
- Labour costs in the March quarter increased significantly and the index is now at a record high of 71.4. More than one in two Queensland businesses increased their labour costs during the March quarter and the index is well above this time last year (65.7) and above the ten year trend of 60.1.