A survey probing CEO expectations found skills shortages, inflation and supply chain disruption topped the list.
National employer association, Ai Group, recently released the results of its annual survey of Australian CEO expectations for 2023.
“Forty-nine per cent of business leaders expect conditions to be stronger in 2023 than 2022. But this optimism is tempered by a number of supply-side concerns,” said Ai Group CEO, Innes Willox.
“An overwhelming 90 per cent of businesses expect to be affected by staffing shortages in 2023. These are most keenly felt in higher-skilled occupations, but are evident across all skill levels, industries and geographic locations.
“Finding and developing more skilled people locally and through immigration remains a central workforce strategy. For example, 50 per cent of businesses said they would increase investment in staff training next year to deal with skills gaps.
“However, this year more and more businesses will look to address persistent skills and labour shortages through operational change. They will consider doing things differently, such as organising work and technology in new and innovative ways.
“Businesses are also expecting inflationary pressures of the past two years to continue, particularly for energy. Supply chain disruptions are expected to persist due to global challenges, despite easing of pandemic-era constraints.
“There are also emerging concerns around global economic headwinds, inflation and rising interest rates will see Australian economic growth slow in 2023.
“Investment plans for 2023 are carefully calibrated to these expectations. Business will attempt to seize growth opportunities by investing in staff capability, technology and supply chain resilience.
“As we suggest in our report, these strategies and investment priorities are critical for Australia businesses to achieve the economic resilience needed for prosperity in a time of global economic uncertainty.
“Our survey demonstrates that it will clearly be another challenging year for many businesses and the need for a relentless focus on productivity across the broader policy agenda has become even more important.
“The Federal Government in particular needs to put productivity and flexibility at the forefront, especially when considering the further changes to workplace relations it plans to introduce later this year.
“We need to catch up on years of below-par productivity growth and we need to gear ourselves for at least a return to 1990s level growth.”
Key survey findings:
Ninety per cent of businesses expect to be affected by staffing shortages in 2023. To manage labour supply risks, they plan to raise wages and benefits, increase staff numbers, and invest in in-house training. With unemployment forecast to remain very low throughout the year, workforce management strategies have squarely shifted from recruitment to retention and re-skilling.
Supply chain disruptions are expected to continue. They currently impact of 78 per cent of businesses, and 88 per cent plan to invest to reduce their vulnerabilities in 2023. Nearly a quarter intend to change their product offerings in light of persistent supply chain disruptions.
Three core challenges – inflationary pressures, labour shortages and supply chain disruptions – are expected to be the main inhibitors to business growth.
More efficiently managing workforces is a key theme for investment. Staff training, business process improvement and ICT are identified as 2023’s top investment priorities. These workforce-oriented investments rank well ahead of traditional priorities such as capital expenditure and R&D.
Growth will be achieved through a focus on improving product and service offerings, as business models are adjusted to new market realities of the post-Covid era. There is a clear preference for developing Australian over international markets, given lingering uncertainties about the global environment.
Ai Group’s 2023 CEO Expectations Survey was conducted in October and November 2022. Responses were received from leaders of 280 private-sector businesses across Australia. Collectively, these businesses employed 102,364 people and had an aggregate annual turnover of around $50 billion in 2022. All Australian states, and all major non-farm private-sector industries, are represented in the survey.
In other news, ARTSA-i Data recently unpacked its Q4 2022 heavy vehicle market report.
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