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Report finds gender pay gap closing and wages rise for Aussie small businesses

- May 1, 2018 3 MIN READ

Despite challenging conditions, the future of small business in Australia Is bright, according to Xero’s annual Small Business Insights Report, released today.

The report reveals an upward trend in the percentage of cash flow positive businesses, alongside an increase in median wages and an influx of new hires, all boosting SME confidence.

For the first time in 12 months, the median wage growth of Australian small businesses has risen. Overall, small businesses saw an impressive median wage growth of 5.3 percent over the past year, based on aggregated and anonymised Xero subscriber data.

Small businesses are also closing the gender wage gap. Among small businesses in mining, median wages for women grew 14 percent in 2017, more than four times as fast as male wages.

Xero CEO Trent Innes suggests with the budget looming, it’s time the government looked at how they could support sustained growth for the SME sector.

“Operating as a small business in 2018 comes with considerable challenges: we are living in a world of global giants and major local chains challenging the markets that small businesses have typically been strongest in. There are more small businesses than ever in Australia, yet the risks they face are more powerful than before,” said Innes.

Xero’s Small Business Insights report looks at the data of 100s of 1000s Australian small businesses anyalsing key performance metrics such as cash flow, employment and global trade. Results from the 2018 report suggest the small business sector remains strong.

Small business employees, across all industries, are seeing growth in their pay packets with those in the rental and hiring sector experiencing the highest wage growth at 7 percent.

“Small businesses are the engine room of the Australian economy, and wages are an important gauge to watch. The fact that wage growth is fairly consistent across the industries demonstrates the strength of small businesses,” said Innes.

However, Innes stressed wage growth was not consistent Australia-wide. SMBs in our regional centres did not fare as well as those in metropolitan areas.

While wages at businesses in metro areas are growing at 4.2 percent per year, those at regional businesses grew at 3.3 percent in the 12 months to December 2017.

“That’s partly because the types of jobs that have fast growing wages—professional, management and information and communications technology jobs— tend to be concentrated in metro areas,” said Andrew Charlton, economist at AlphaBeta.

“Also, many of the regional industries—especially mining and agriculture—are experiencing slightly slower wage growth this year.”

In all, wage growth has been faster in metro areas in every state except Tasmania, where regional wage growth among small businesses outpaced that in the cities (3.2 percent versus 0.7 percent).

“While small business wage growth has been significant overall, there remains a disparity between metro and regional areas, revealing a continued need to develop economic opportunity for regional towns across Australia,” Innes said

The report also shows the government led mandate pushing for shorter trading terms and faster payments for small businesses, seems to have some effect. Small businesses are reporting they are being paid three days faster and the wait time for a 30 day invoice to be paid has decreased to 34.2 days, the best figure in three years.

In 2018 almost half of all Australian small businesses (49.4) reported they were cash flow positive; a 2.8 percent increase on last year.

Findings from a survey into small business pain points was also included as part of the report. 46.2 percent of businesses suggested expanding their customer network was their largest issue.To help them get in front of more customers, almost half of these small businesses are looking to government to provide education and guidance on how to expand globally (45.6 percent), while two in five small businesses (40 percent) want the government to provide better access to global deals.

The report has also revealed small business is leading the charge when it comes to ending the gender pay gap.

Interestingly, industries that are often perceived as more male-dominated are in fact the most progressive when it comes to narrowing the gender pay gap.

Xero’s SBI data shows that median wages for women grew 14 percent across 2017, or more than four times as fast as male wages. Information media & telecom also saw a big difference in growth, with women’s wages rising 6 percent compared to 0.9 percent for men.

While there is still a huge disparity in the actual wages earned by male and female workers in these industries, there is progress.

“It’s good news that the wage gap is shrinking,” Charlton says. “There has been a lot of focus on the gap in large businesses. Xero’s data confirms that change is occurring in small businesses too.”

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