Job creation looking weak in SME sector

By Ben Chapman-Smith

Fewer than 10 per cent of SME employers are planning to take on new staff in the year ahead.
Fewer than 10 per cent of SME employers are planning to take on new staff in the year ahead.

Business confidence may be tracking upwards but very few small and medium enterprise owners are intending to hire new staff in the year ahead, according to a new report.

MYOB has just reviewed three years worth of employment data from its Business Monitor, a regular survey of about 1000 SME owners across the country.

Only 8 per cent of employers were planning to take on new staff in the year to February 2014, MYOB said. This was down from 11 per cent in both 2011 and in 2012.

MYOB spokesperson James Scollay said growing confidence across the SME sector was not translating into a significant improvement in employment intentions.

"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.

"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," Scollay said.

Given the high number of Kiwis who were or could be employed by SMEs, weak hiring intention was an obvious concern.

"This is something we hope to see change so more households can enjoy the benefits of improved growth spreading across the whole country."

On a more positive note, layoffs in the sector are looking unlikely in the year ahead.

MYOB said the proportion of SME owners planning on maintaining existing staff levels rose to 72 per cent, from 66 per cent over the previous two years.

"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," Scollay said.

According to a monthly survey by ANZ, business confidence has been been on a strongly rising trend since the middle of last year.

The most recent survey showed confidence reached its highest level since April 1999, with a net 53 per cent of respondents expecting the general business situation to improve over the year ahead, up from 50 per cent in June.

Scollay said mid-sized businesses - those with more than 20 employees - were giving some cause for hope in the SME employment market.

Of the employment opportunities arising, most were in this sector, he said.

"This is a very positive sign, not only because it signals more direct employment opportunities for New Zealanders, but also because the growth of mid-sized businesses tends to flow through to the many SMEs they work with," he said.

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