Cost of labour reduces employment

Almost half of Australia’s accommodation industry has reduced staffing levels as a direct result of increased labour costs in the current financial year.  

This is one of the key findings from a major survey of industry operators which has been conducted by the Accommodation Association of Australia.

The top-line findings from the survey that was completed by more than 200 businesses in the accommodation industry, were:

  • More than 45% of respondents have reduced staffing levels because of increased labour costs in the 2012/13 financial year;
  • Almost 40% of respondents are expecting to reduce staffing levels because of increased labour costs in the upcoming financial year, while a further 36% are considering a reduction;
  • Over 50% of operators attribute the negative employment growth in the industry(from 2008-June 2012) to wage increases and high penalty rates; and
  • Over 55% of operators indicated that they have had a reduction in profits over the past year.

“The survey results are compelling evidence of the challenges that the accommodation industry is facing because of the high cost of labour,” said the Accommodation Association of Australia’s chief executive officer, Richard Munro. “It remains our industry’s highest cost and until there are closer links between wages and productivity, the accommodation industry, as well as tourism more broadly, will suffer.”

The release of the survey results follows the decision to lift the minimum wage by 2.6%, placing increased pressure on the industry.

Mr Munro said that while staff are one of the industry’s most valuable resources, the cost of wages has been outpacing revenue. “Australia’s current workplace relations system is unbalanced and needs recalibrating,” he said.

“We are not against payment of penalty rates to staff, but the situation on public holidays where accommodation operators pay penalty rates on top of other penalty rates is not sustainable in the long-term for an industry which is open 24 hours a day, seven days a week.”

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