‘Tough times’: Dire fate awaiting thousands of Australian employees as brutal recession looms

Tough times are well and truly here, with a string of alarming statistics revealing exactly what’s in store for many Aussie employees.

A staggering number of Aussie businesses are planning to lay off staff in 2023 as the grim economic conditions plaguing the globe start to wreak havoc locally as well.

Almost two in five business leaders (38 per cent) expect to let employees go this year, according to data from a new research report by global HR firm Deel and YouGov, with 15 per cent saying it will impact up to 20 per cent of their team.

Deel’s new “Australian Business Leader Pulse Check: Business Growth, Workforce and Hiring” report found that 92 per cent of bosses are battling rising costs and inflation at the moment, with 75 per cent of respondents indicating their businesses will take measures related to staff, including 32 per cent who plan to review or reduce overheads and 20 per cent who expect to consolidate departments or functions.

Meanwhile, 45 per cent of senior business decision-makers cite rising operating costs as the top challenge in Australia in 2023, with 47 per cent opting to not offer pay rises at all as a result, or to offer raises to high performers only.

There are tough times ahead for thousands of workers.

At the same time as businesses are battling inflation, they are also facing many HR challenges, including wage increase pressures, flexible work requests, workforce transformation, talent retention, maintaining or increasing productivity and talent sourcing.

Speaking to news.com.au, Deel CEO Alex Bouaziz said that while the future in Australia was “really bright compared to other countries in the world”, there would likely be pain ahead for many of us.

“From my personal perspective talking to customers over the last few years, they’ve had a great few years where they flourished and invested, but now the world is entering a form of recession and everyone is cutting costs, and some jobs … aren’t needed as much as before,” he said.

“People are apprehensive about the market and what’s going to happen all over the world, not just in Australia, and they understand it’s what they have to do in tough times.

“It’s also happening in many different industries … The current times are not exactly the easiest for companies.”

However, Mr Bouaziz said it wasn’t all bad news for Aussie workers.

“On the employee side, many people are finding jobs very fast … and some of the best companies in Australia like Atlassian are hungry to hire great talent,” he said.

“Australia is in a great place and the best companies will keep hiring as they grow.

“There might be some redundancies for some roles – for example, talent acquisition has been very, very focused on hiring a lot of people, but now a slowdown is hitting a bit, you don’t need an army in acquisitions.”

Many Aussie workers will go without a pay rise in 2023 despite soaring inflation. Picture: iStock

He urged workers who were made redundant to “leave on good terms” because “reputation is so important”, and to remember that many local firms were offering “great packages” to those who were let go.

“I don’t think in Australia you need to be too worried because the market is very different to the rest of the world,” he said.

Aussie labour market ‘will weaken this year’

The research comes hot on the heels of the Australian Bureau of Statistics’ latest Wage Price Index report released on Wednesday, which revealed Australian wages rose by 0.8 per cent in the March quarter – falling short of market expectations – to be 3.7 per cent higher than a year ago.

“While Australian wages are growing at their fastest annual pace in a decade, the reality is that the purchasing power of Australian incomes has crashed,” Callam Pickering, APAC economist at Indeed, said of the latest figures.

“The disconnect between wage growth and inflation is devastating for households across the country, with cost of living pressures easily outstripping wage gains.

“Adjusted for inflation, Australian wages have fallen by 3.2 per cent over the past year and by 7.2 per cent since their peak. More than a decade of hard-won wage gains – our blood, sweat and tears – lost over the course of just one year.

“Unless you’ve received a promotion or changed employer recently, there is a good chance that your salary buys a lot less now than it did a year ago.”

And according to AMP Australia’s deputy chief economist Diana Mousina, real wages growth, which takes into account changes in inflation, “is still negative”.

The Aussie labour market ‘will weaken this year’. Picture: iStock

“Negative real wages growth is a drag on consumer spending but will improve as inflation is expected to slow significantly from its current level (of 7 per cent per annum).

“Trying to lift real wages growth to zero (where wages growth matches inflation) is not desirable … because it would lead to more RBA interest rate rises as it would increase the risk of a wages breakout.”

She added that Australia’s labour market “will weaken this year as the economy slows from the impact of higher interest rates”.

“Job advertisements are already well off their peaks,” she said.

“It will be difficult to get significant wage gains while the unemployment rate is increasing, as usually wages growth slows when the unemployment rate rises.”

Originally published as ‘Tough times’: Dire fate awaiting thousands of Australian employees as brutal recession looms