Small business on losing side in staff shortages battle

Small businesses are facing an extra hurdle in the battle against staff shortages as larger corporates flex their muscles and use their own innovation to attract and keep staff.

With the economy in transition staff are at the top of most business’ concerns, with a combination of ongoing COVID-19 hits, the flu, a plethora of job alternatives, skill shortages and lack of short and long term international arrivals all taking a toll.

Much of the above is hitting big and small business equally, but competition between the two is now emerging as a new hurdle for small business.

Bigger businesses can afford to offer more perks to attract staff, on top of increased bonuses.

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These include bonus vacation days, more flexible working arrangements, higher wages and other perks, which COSBOA chief executive Alexi Boyd tells SmartCompany, “is making it extremely difficult to compete, starting in sectors like accounting, ICT and elsewhere”.

Yet if finding staff is a major issue now, then finding a job may become the problem next year if the economy slows as predicted.

NAB chief economist Alan Oster is forecasting GDP growth of 3.5% this calendar year, slowing to 1.8% in 2023 and a global slowdown will compound the problem. He sees the job hunt as being shared across the spectrum.

Oster is tipping interest rates to peak in the near term at 2.6%.

At the macro level the economy is okay right now, but going forward is at best uncertain. 

Judo Bank economic advisor Warren Hogan sees the staff problem as an emerging issue starting between small and medium-sized businesses.

“The medium businesses can compete but the small business sector is finding it harder,” he tells SmartCompany. 

In the US, the Wall Street Journal reports the head counts at businesses with fewer than 50 employees are starting to fall due to economy wide shortages, with the big end of town at the front of the line to attract staff.    

Fin Tech Australia’s Rehan D’Almedia told SmartCompany: “It’s a turbulent time in the technology sector right now. It’s difficult to say exactly where the talent market is, given the ongoing demand from growing companies coupled with various redundancies in tech.”

To offset career opportunities in fintech, bigger companies are fast forwarding promotions to counter one advantage perceived at startups.

“One of the reasons we’re seeing greater perks and benefits from larger financial services companies is the competition put on them from fintechs,” he added.

Paul Byrne, CEO of payments company Zai, says strong competition for talent within tech was inevitable given the small talent pool to hire from.

“However, startup and scaling companies can overcome this by fostering inclusive, dynamic workplaces alongside a strong company vision and belief in the products they are delivering.”

The competition is not only heating up in the finance sector. Labour shortages are reported across the board, from paddock to plate to hospitality, according to Richard Forbes, chief executive of the Independent Food Distributors.

Some estimates suggest shortages at independent grocers around 20,000 staff, convenience stores around 15,000 staff, food distribution including truck drivers 5000 and hospitality around 100,000 people.

The issue according to Forbes is critical.

Will Richardson, managing partner at venture capital firm Giant Leap, told SmartCompany there had also been a rise in employees leaving companies to start their own businesses.

“We think this period of economic turbulence will give many the nudge they needed to go out and create their own startup. We saw this during the last economic recoil at the start of the COVID-19 pandemic and expect to see it again.”

The battle for smaller businesses is to come up with the formula to score some wins in a war with the big end of town, in an economy recovering from the COVID-19 shutdowns.

The inflation hangover and cost increases from interest rates down just makes it all more difficult.