More lay-offs expected as businesses struggle to cope with rising financial pressures

Ninety-two per cent of bosses are prepared to take significant measures in order to cope with rising operating costs in 2023.

According to a new research report by global HR company Deel, in partnership with YouGov, 45 per cent of senior business decision-makers cite rising operating costs as the number one challenge in the Australian market this year.

The Australian Business Leader Pulse Check: Business Growth, Workforce and Hiring report found 92 per cent of leaders are set to take measures to respond to tougher economic conditions.

Seventy-five per cent of respondents indicated their businesses would take measures related to staff.

Of these, 47 per cent said they would either not be offering a pay rise to staff in 2023 (14 per cent) or would do so for only some employees based on their performance (33 per cent).

Meanwhile, 38 per cent of business leaders said they expect to lay off staff in 2023. Fifteen per cent of these said this would impact 10 per cent to 20 per cent of their staff.

A further 20 per cent of respondents expect to consolidate departments and/or functions.

The report also delved into some specific HR challenges for the year ahead.

Twenty-eight per cent said wage increase pressures were a top challenge for HR teams, followed by flexible work requests (26 per cent) and workforce transformation (also 26 per cent).

Talent retention was selected as a key challenge for HR professionals (25 per cent), as was maintaining and/or increasing productivity (25 per cent), talent sourcing (24 per cent), and finding and keeping pace with the latest technology (21 per cent).

Elsewhere, the report highlighted business leader sentiment around international expansion opportunities.

Sixty-one per cent of survey respondents indicated that their organisations are planning to expand to new markets in the next two to three years. This comes despite concerns about rising operating costs. Among those companies considering an international market in the coming two or three years, Singapore is the most common target market for expansion, with 26 per cent of respondents naming the city-state. Other top target markets were the US (23 per cent) and the UK (21 per cent).

Supply chain and logistics were named as top challenges to businesses expanding into other markers by 42 per cent of respondents, followed by hiring staff in the target market (41 per cent), compliance with local regulations such as labour and tax laws (37 per cent), and cash flow or funding (also 37 per cent).

“The research showcases just how prevalent an international strategy has become among organisations in Australia, and local businesses are fast adopting a recruitment and employee management approach to match,” said Shannon Karaka, country leader, Australia and New Zealand, Deel.

“Data from Deel’s global hiring platform is further proof of this trend, with Australia leading APAC for fastest growth by organisations’ rate of hiring and number of organisations hiring as shown in our most recent global hiring report.

“As talent challenges in the local market mount, a global approach to hiring represents a path forward for Australian businesses looking to buck the local market trends and go for growth.”