The recent SME Index provided by Employment Hero unveils a challenging picture of the labour market, with the tech sector experiencing a plateau in employee growth and a sharp decrease in wages. This contrasts starkly against last year’s thriving, pandemic-induced, tech boom.
Out of all the industries, the tech sector is grappling with the most significant wage drop (4.8%, January to February) and the smallest employee growth (0.1% MoM, 4.2% YoY). This reveals a startling contrast to the total average (0.4% MoM and 6.7% YoY). The wage decrease of tech workers is unmatched by any other industry; their pay declined by 0.2% over a year, while all other sectors have recorded at least 6% YoY growth and a rise of 0.3-1% in the past quarter.
Eddie Kolwalski, Senior Data and Insights at Employment Hero, remarked that “the tech sector is continuing to undergo a course correction.” This follows an impressive growth phase primarily due to previously low-interest rates, which stimulated growth amid the peak of the pandemic lockdowns. Mr. Kolwalski added, “Employee growth is also flattening. This indicates a cycle of fiscal tightening and a focus on short-term profitability across the board, both of which are now being felt on employees’ pay packets.”
Despite the wage setback, tech workers continue to be among the nation’s highest earners due to ongoing high demand in the sector. These employees earn a median hourly rate exceeding $57 per hour. Interestingly, this trend is unlikely to change in the immediate future, despite market corrections. “We expect the long-term trend for tech to be one of growth but workers in this sector may feel the pinch a bit more than they’re accustomed to as we go through this adjustment period,” said Mr. Kolwalski.
The report also highlighted Australians working longer hours for reduced wages. Across the 1.5 million employees and 150,000 SMEs, the Index revealed that employees at SMEs may face higher underemployment rates as median work hours fell by 2.8% last month, with employment growth remaining stagnant at 0.3% MoM and 5.6% annually. Particular upheaval was experienced by Australia’s oldest workers (65 years and above), having to work longer hours (a MoM rise of 10.4%) to make ends meet.
According to the Index, the median hourly wage in February dipped to $38.08, despite growing annually by 7.5%. While Australian employees are dealing with wage decline across the board, the hardest-hit has been the tech sector, which saw a sharp MoM drop in the hourly rate, falling 4.8% to $57.12.
Mr. Kolwalski illuminated on the broader impacts demonstrated by the data. He said, “The dramatic shifts in working hours, especially among the eldest and youngest in the workforce, reflect broader economic pressures and the uneven impact on different demographic groups. There’s not much to celebrate when people are in jobs but not making enough to live off it.”
These statistics underline the pressures faced by workers and businesses alike as they navigate through economic pressures and challenges.
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