Only 13% of SMEs intend to take on new staff in the next six months, the Westpac Business Growth Monitor has revealed, with just 16% intending to do so over the next 12 months.
Business Growth Monitor measures the confidence that more than 500 SMEs (with less than $5million turnover) have in the economy, their plans to grow, intention to create jobs and need for funding.
“The reluctance to take on staff may be related to concerns about how strong growth will be over the coming year,” said Westpac
head of specialists business Steve Atkinson.
“Over the next six months, 39% believe it will be unstable or in decline against 43% who think it will grow.”
chief John Bolton
can relate to Westpac
’s data, telling NZ Adviser
they are also becoming more conservative with recruitment decisions in the current environment and it’s important not to overinvest.
“Recruitment is generally a longer term investment decision and it’s hard to adjust recruitment quickly,” says Bolton.
“You’ve also got to take on a level of responsibility when you recruit because you’re betting with people’s lives.
“They have financial commitments and families and everything else so you’ve got an obligation to make sure you can provide them with certainty and I think that’s really important. And in that context you wouldn’t really want to over recruit in this environment.”
He says the industry knows there will be a global marketing correction at some stage but when it will happen is another questions, whether this year or in three years.
“Businesses are looking at the global economy and really unsure about what it means for investment decisions,” says Bolton.
“When you have such significant swings in volatility it becomes very difficult to plan the future. I think from a housing market perspective we’re going into a really strong period at the moment. There’s a lot of activity starting to occur in the market. But I’m also mindful that there are huge amounts of risk sitting on the horizon.”
Bolton told NZ Adviser
that in the uncertain environment, Squirrel
is focusing on productivity improvements rather than increasing staff numbers to be prepared for when a correction may occur.
“We’re much more focused on productivity and in helping our people do more, rather than simply going out and recruiting more people and I think that’s a theme that you would hear across most businesses.”
“SMEs are being a bit cautious, not wanting to overinvest and we’d be no different to that.”
“What we’ve got to remind ourselves is that confidence drives everything. Economic growth at the moment is not that good but there’s sufficient confidence out there. But when that confidence swings and people lose confidence, that’s when things can get pear-shaped very fast. Deflation is probably the biggest destabilizer because it completely destroys confidence.”