Half of businesses face profit declines

A recent survey has uncovered 45% of accommodation businesses were forced to reduce their staffing levels in the 2012/13 financial year.

The Accomodation Association of Australia survey, which involved a total of 200 businesses, cited increasing labour costs as the key reason for staff layoffs as employers simply cannot afford to keep them on.

The survey also found 40% of respondents will to continue to reduce staffing levels because of increasing labour costs in the 2013/14 financial year, meanwhile 36% are considering it.

More than 50% of those surveyed believe wage increases and high penalty rates are the reason behind the industry’s negative growth from 2008 to June 2012, and with the minimum wage recently lifted by 2.6% employers will be under increasing pressure.

Richard Munro

Richard Munro, AAA CEO, said “the survey results are compelling evidence of the challenges that the accommodation industry is facing because of the high cost of labour. “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 survey also found businesses are not performing well financially, with 55% of respondents stating profits have declined over the past year.

Mr Munro said staff are one of the industry’s most valuable resources, however businesses are struggling to make a profit when wage costs are so high. “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.

“The current regime is particularly harsh for small businesses in our sector.

“The accommodation industry is looking forward to a fresh approach following the federal election September,” he said.

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