Wages have overtaken energy costs as one of the top concerns for businesses, according to an industry survey by BusinessNSW.
The latest Business Conditions Survey from the state’s peak business body reveals the top three business cost concerns are now insurance costs, taxes, and wages.
Energy costs have slipped outside of the top three for the first time since this survey question was introduced at the start of 2023 – with taxpayer-funded subsidies having an impact on energy bills.
Coupled with rising insurance premiums and taxes, wage pressures have signalled a shift in priorities as employers grapple with a tight labour market.
Despite the heat being taken out of energy price increases, eight in 10 businesses don’t expect energy prices to be any lower in two years’ time.
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Cowra businesses are far from immune to the impacts.
Minko Jamieson of Gingerbird cafe says businesses have to absorb changing energy prices as just one of many factors affecting business owners.
"We've had to raise prices twice since opening, but I couldn't attribute that to energy prices alone," he said, saying that even if a business might not directly pay for rising costs, their peripheral or supporting roles in logistics and supply will be footing costs they pass on.
"It's cyclical, my suppliers and everyone else would be affected by it." he said.
Discrretionary spending habits have also changed.
Business NSW CEO Daniel Hunter said businesses have also felt the pinch as customers negotiate prices and cut back.
The survey found 38 per cent of businesses are facing price negotiations, 30 per cent are seeing more demand for cheaper alternatives, and 39 per cent are waiting longer for invoices to be paid.
“Businesses are already under pressure from rising operational costs, and now, with delayed payments becoming more common, it’s even harder for them to stay afloat,” Mr Hunter said.
“Nearly 40% of businesses are now waiting longer for invoices to be settled, which means they have less cash flow to cover their own expenses. For small businesses, this delay could be the difference between staying open or closing their doors.”
Despite concerns about wages and costs, the survey reveals business sentiment is improving.
“It's encouraging to see the Business Confidence Index rebound from -67.8 in September to -54.0 in December,” Mr Hunter said.
“While still slightly below the start-of-year figure, this recovery shows businesses are regaining optimism and adapting to tough conditions, which is a positive sign for future growth."
Findings from the report included that more businesses are turning to international students to fill key workforce gaps, with nearly half of employers saying they’re vital to easing the labour crisis and driving economic growth.
The top business challenges were financial management, regulation and compliance, and strategic planning, while customer demand remained weak. The report also heard that customers are making fewer purchases, and smaller orders, with increased price negitioation and demand for lower-prices substitutes.
Despite rising costs, businesses like NAME”S are keeping staff on, much the same as businesses across the state. About 58 per cent reported maintaining staffing levels.
Mr Hunter said the findings show small and medium-sized businesses have faced significant challenges and need more government focus.
For Minko, Gingerbird is still humming along. "I don't like to talk about price without also talking about product. I'm often more worried when I see business who don't match their prices to their service, because I'd wonder whether or not they're healthy."
