Jul 2021

Wage Growth and How It’s Going To Affect SMEs

By: Odyssey General, Outsourcing
Tags: labour shortage, wage growth

During this past week, the new South-East visa scheme was announced as part of the UK-Australia free trade agreement. The idea behind this agreement is to allow workers from South-East Asia countries to come to Australia to help out farmers with harvesting due to the shortfall of workers. Meanwhile, UK backpackers will no longer be required to carry out 88 days farm work in order to extend their visas.

This new visa scheme has come under criticism by the Australian Workers Union (AWU). On one hand, they claimed that it is inhumane to continue exploiting foreign workers. On the other hand, it is believed that the new scheme would put a downward pressure on Australian wages while Australia is looking forward to accelerating wage growth.

The AWU is not alone in the fight to tackling low wage growth. Due to the significant labour scarcity, workers have begun to demand better compensation. For example, in my previous blog, I noted how local workers have demanded a 50% raise in pay compared to before the outbreak. All of these efforts will eventually trickle through the economy, resulting in all wages to grow.

SMEs will suffer when that time comes. Given the same volume of work, these companies must now spend more on sustaining their onshore fixed resource(s). To make matters worse, SMEs’ minimal bargaining power with customers will prevent them from raising prices, resulting in lower profits.

A better model exists is outsourcing. Firm owners do not have to worry about fixed labour expenditures while working with an outsourcing company. Only when the work is completed is the outsourcing provider paid. For businesses trying to cut fixed costs, this ad-hoc solution is ideal, if not perfect.

Interested in engaging with an outsourcing company? Talk to Odyssey today about how we can resolve half of your firm’s problems, and remove the labour resource shortage issues!

All Related Articles

Share this article