Media release

Struggle for profits stifles productivity

Andrew Kay
Tuesday, August 20th 2024
Shutterstock 2495145709

South Australian businesses are too focused on their battle to stay afloat to invest in measures that might improve productivity, according to the latest South Australian Business Chamber and William Buck quarterly Survey of Business Expectations.

The survey, which reported a decline in business confidence and conditions in South Australia, has highlighted the challenges faced by business as high trading costs coincide with a decline in economic activity.

The productivity stalemate was emphasised by 57.3% of businesses reporting it as unchanged over the past 12 months, while 27.7% said their productivity had declined over that period. South Australian Business Chamber CEO, Andrew Kay said a profitability squeeze has meant that investments in productivity are low on the priority list for smaller businesses.

Of those businesses reporting a decline in productivity, struggling to stay profitable was the main issue,” said Mr. Kay. For businesses whose productivity was stagnant, the cost of doing business and economic factors were the key concerns.”

These results are in keeping with what we hear from businesses across the state,” Mr. Kay said. While operators understand there are areas they should be investing in such as productivity gains, cybersecurity or net zero programs, when times are tough the focus can become quite narrow and survival instinct kicks in.”

In a message to the government that supports the Chamber’s advocacy agenda, payroll tax reform was voted the number one policy that should be pursued to improve productivity.

The indices that define business confidence and conditions have also dropped well below the neutral position of 100 points in the latest survey. Confidence has declined to 82.9 and Business Conditions are at 82.7, both down on the previous quarter.

Mr. Kay said the slump in profitability was also fuelling this negative sentiment. The Profitability Index of 76.4 points is the lowest recorded since June 2020, or peak Covid. With business costs such as materials, wages, overheads and training all reporting high increases and the economy slowing down, this result is not surprising but should be of great concern to our policymakers.”

For a detailed breakdown of June quarter results, click here.

MEDIA CONTACT
Andrew Kay, CEO SA Business Chamber
Phone – 0439009590
Email – akay@​sabusinesschamber.​com.​au

Author

Andrew Kay

Chief Executive Officer
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