Australian SMEs urged to boost productivity amid rising costs

Australian small and medium enterprises (SMEs) are being urged to prioritize productivity improvements to combat rising operating costs and increasing customer resistance to price hikes. Recent data from the Australian Bureau of Statistics shows labour productivity remained flat in the June quarter and declined by 0.2 per cent over the year.

According to the Reserve Bank of Australia, rising customer price sensitivity is limiting the ability of businesses to pass on higher costs. James Beeson, CEO of Earlypay, suggested that instead of extending working hours, businesses should invest in better equipment, technology, skills, and processes to increase output per hour worked. Potential applications include AI for administrative tasks, improved machinery in manufacturing, and better scheduling technology in transport.

Financial pressures are also mounting, with some larger businesses seeking finance to manage cash flow gaps. In sectors like transport and construction, fixed contract prices can prevent companies from recovering increased operating expenses. Experts suggest that successful businesses are focusing on efficiency through automation and technology rather than debt-fueled expansion.