Wages component of Australian SMEs increases - Results of Zurich’s Global SME report now in
This is double the number who reported increasing wages in the previous year’s survey.
The result is a stand-out for Australia on the international scene. Globally, on average, only one in five SMEs reported increasing wages over 2013/2014.
‘Australia has a unique labour market. We have had a strong economy and, until recently, very low unemployment, with rates in some parts of Sydney as low as 2%,’ says James Makin, Head of Commercial Portfolio Management.
‘It could be that SMEs are finding they have to increase wages to attract and retain employees in such a tight labour market.
‘Given the increased onus of wages on SMEs, many should be considering business interruption insurance as part of their insurance portfolio. This covers salaries that must continue to be paid even when an SME is prevented from conducting business,’ says Makin.
Currently, only about half of those SMEs that take out property insurance with Zurich include business interruption in the package.
‘There can be significant costs to a business which is unable to trade for a variety of reasons. These could be problems in their supply chain beyond their control, or a fire in a property next door limiting access to their business.
‘During the Brisbane floods, it took a few weeks for some businesses to be up and running again, during which time wages and rent still had to be paid though no income was coming in,’ says Makin.
As jobs in Australia have also seen a move from manufacturing to the service sector, the wages component of business costs has increased. This would mean paying wages during an interruption to business would represent a greater risk.
In line with the global trends, one in five Australian SMEs expanded activity to target new customers in the domestic market, with around the same number diversifying their product or service range.
Talking about the global picture, Mike Kerner, Zurich’s CEO General Insurance, says: ‘SMEs were hit particularly hard by the financial crisis which affected their ability to grow and restricted their ability to borrow in regions like Europe. The survey findings are encouraging. Not only do they show that SMEs are taking advantage of the economic recovery and positioning themselves for growth, but in doing so they will enable a more sustained recovery.’
Zurich’s second annual SME survey was carried out by research company GfK in mid 2014. The leaders of 3,800 small and medium sized enterprises (0 to 250 full-time employees) around the world were asked to identify up to three actions they had taken over the previous 12 months. A representative sample of 200 CEO/owners, general managers, CFO/treasurers, COO/head of operations from each of the following 19 countries were included: Argentina, Australia, Austria, Brazil, Germany, Hong Kong, Ireland, Italy, Malaysia, Mexico, Morocco, Portugal, South Africa, Spain, Switzerland, Taiwan, Turkey, UAE and the UK. Zurich and the GfK continue to monitor SMEs to understand how they are managing the challenges they face and expect to publish further reports in the near future.
Read more on the global report.
For further information contact:
Head of Marketing, Communications & Customer, General Insurance
Zurich Financial Services Australia Limited
Level 3, 5 Blue Street, North Sydney, NSW 2060
Phone: +61 (02) 9995 1368
Zurich Insurance Group (Zurich) is a leading multi-line insurer that serves its customers in global and local markets. With about 55,000 employees, it provides a wide range of general insurance and life insurance products and services. Zurich’s customers include individuals, small businesses, and mid-sized and large companies, including multinational corporations, in more than 170 countries. The Group is headquartered in Zurich, Switzerland, where it was founded in 1872. The holding company, Zurich Insurance Group Ltd (ZURN), is listed on the SIX Swiss Exchange and has a level I American Depositary Receipt (ZURVY) program, which is traded over-the-counter on OTCQX. Further information about Zurich is available at www.zurich.com.