Christmas is expected to be more expensive for West Australians this year as businesses struggle to find workers and manage rising costs.
- Business explodes as the holiday season approaches
- But businesses are grappling with labor and supply issues
- Over 80% have passed on or plan to pass on additional costs
According to the WA Chamber of Commerce and Industry (CCIWA), about four out of five WA businesses are forced to pass on cost increases to their customers.
As the holiday season kicks off, business is booming, but skilled labor shortages and supply chain issues are driving up the cost of doing business.
That means lower profits for business owners hoping to make the most of a Christmas without masks, capacity limits and other pandemic restrictions.
Labor shortages and cost pressures weigh
Gift packages and holiday meals will be on the minds of families, but the economic pressures in WA can be seen in something as small as a cup of coffee.
In Perth’s entertainment district, Huon Thi Huynh has been running a small cafe for about five years.
Although she did her best to avoid passing the cost pressure on to her customers, Ms Huynh said she was forced to raise the price of a cup of coffee.
“For about a month now, [I’ve] increased by 20 cents per coffee,” she said.
“I chose not to increase the price a lot, but to attract more customers to the store rather than increase the price a lot.”
Like many businesses on her street, Ms. Huynh has a sign hanging outside her store looking for experienced workers.
Kailey Chong, 17, is one of many new recruits trained by Ms. Huynh in the small cafe.
“We’ve had a hard time finding someone who’s like, long-term, and can stick around for a long time,” she said.
Fall in business confidence: CCIWA
Businesses haven’t been this pessimistic since the start of the pandemic, according to the CCIWA’s December quarter business confidence survey.
West Australians are expected to spend relatively big this Christmas, but many companies may not see this translate into increased profits as they pay more to try to keep the workers they have .
“Wages are rising significantly … and sectors like healthcare, mining, professional services, are all significantly affected,” said CCIWA chief economist Aaron Morey.
“We are seeing profits falling very rapidly among the WA business community, particularly SMEs (small and medium enterprises) in retail, in the foodservice sector.”
According to the CCIWA survey, companies in Western Australia offered an average of around 11% base salary increases for existing employees, compared to the annual Western Australian Wage Price Index of only 3.3%.
The hit to their results has seen long-term confidence plunge, with just 15% of companies expecting conditions to improve over the next year.
Mr Morey said the government should try to reduce the burden of social charges to help affected businesses.
“Businesses in Western Australia face the heaviest burden of social charges in this country. The state government could relieve this pressure by reducing this burden,” he said.
pass on the cost
Balancing inflationary pressures, skilled labor shortages and more expensive supplies caused 79% of businesses to pass on rising costs to consumers, according to the CCIWA.
“It’s the small business owner who’s really caught in the middle,” Morey said.
Among survey respondents, the retail, restaurant and real estate sectors were the least optimistic, with a high proportion of businesses not expecting conditions to improve.
Perth liquor store manager Louise Dawson is struggling to find staff.
“It took me a while to find someone, probably two, three months to find someone just to fill in on Friday and Saturday nights,” she said.
Ms Dawson said while business was going well for her, things weren’t going so well for some neighboring businesses.
“Most are hanging in there…a few restaurants have closed recently,” she said.
About half of the companies surveyed in the CCIWA survey also indicated that supply chain disruptions were a permanent impediment to doing business.
“Certainly a few shipping delays here and there, but we have our whole team working their best to try and … make sure everyone gets their orders before Christmas,” said Toby Muenchow, store supervisor of clothes.
“I think it’s getting more and more crowded. I feel like I’m in a last minute rush for Christmas. Everyone is trying to rush out and get last minute presents.”
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