Alliott NZ Director Vanessa Williams
recently watched a very good remuneration webinar
The webinar, presented by Strategic Pay, covered key topics including movements in remuneration.Data from their samples showed general market and private sector remuneration increasing between 5.4-5.5% in the 2022 /2023 year. They are also forecasting a 5% remuneration increase for the 2023/2024 year.
This information is also consistent with what we are seeing with the annual wage cost inflation to March 2023 which is now at 4.3% per Stats NZ. This is the highest level since 1992. For the March quarter alone, the increase was 1%. (This was assisted by the public sector collective agreements in the health industry. Unemployment for the March quarter was unchanged at 3.4%.)
So, what does this mean for our SMEs?It looks like it will be yet another challenging year of rising wage costs.
Worsening economic conditions could push unemployment rates up, creating more labour supply which may ease wage pressure. However, while we are seeing SMEs making some small reductions in employee numbers, we are not seeing mass unemployment. Immigration numbers are also trending upwards. There are signs the labour shortage may be easing, but perhaps not fast enough to cause a major effect in the short term.
For small business owners it is going to be a balancing act to meet employee wage expectations and still maintain the required profitability, especially if sales slow. More than ever it’s important to forecast your cash flows and profitability. Also be prepared to re-forecast during the year as conditions change.
For assistance on this topic — payroll, cash flow and/or business profitability — contact the award-winning team at Alliott NZ in Auckland.