On the International Day for MSMEs, we discuss the contributions and challenges of Micro, Small and Medium enterprises in Australia, and look at how SMEs contribute to the Sustainable Development Goals (SDGs).
Globally, these organisations account for 90% of businesses, more than 70% of employment, and 50% of GDP. In Australia, 67% of workers are employed by small (0-19 employees) or medium (20 – 199 employees) businesses.
Key Points:
- SMEs face greater challenges attracting and retaining top talent than their larger counterparts
- Without internal resources, many SMEs have failed to keep up to date with rapidly changing and complex employment legislation
- In Australia, any organisation with government contracts has had to change their approach to Environmental, Social, and Governance issues across their supply chain, increasing the necessity for businesses to make changes.
- MSMEs contribute significantly to the SDGs, which is why it is important for individuals to support them and larger organisations to work with them
Not only do MSMEs remain at the core of the economy, but they also contribute significantly to the UN’s Sustainable Development Goals (SDGs), providing employment opportunities and income streams for many families.
The Bayside Group is soon to be celebrating our 50th anniversary as an Australian owned and operated SME. With the complexity of Australian legislation, in particularly employment related laws and challenges, we are passionate about supporting start-ups and SMEs to implement ethical and compliant employment practices that help to achieve their goals.
We therefore wanted to look at key employment issues facing SMEs and how they contribute to the SDGs, and their role in assisting larger organisations do the same!
Key employment challenges facing SMEs
1. Attracting and retaining top talent
Competing with larger organisations for talent can be challenging for SMEs, who often face lower vacancy fill rates than larger businesses. This gap widens when skill shortages are prevalent, which means attracting talent is not necessarily a problem SMEs can solve alone.
There are four significant barriers to attracting top talent for SMEs:
- Limited employer brand visibility
- Ability to reach active and passive candidates
- Difficulty competing on salary
- Perception of career progression and opportunities
Advice in the market will rightly encourage organisations to focus on building a compelling employer brand, offering flexible and unique benefits and providing personalised growth opportunities. However, these are generally long-term strategies towards attracting and retaining key talent. This can leave SMEs frustrated as to how to solve immediate challenges.
In the short-term, a recruitment partner can provide advice on salary structures focused on performance to improve the competitiveness of offers, help SMEs to reach more candidates and independently present the employee value proposition. There are many benefits to working for an SME that include autonomy, greater exposure to a broad range of experiences, and the ability to make a significant contribution. An effective recruitment partner will work with candidates to compare these benefits with larger organisations, aligning expectations and skills.
By implementing long-term strategies and utilising key supports, SMEs can enhance their ability to attract and retain top talent in a competitive market.
2. Navigating employment legislation
All Australian organisations are expected to comply with employment legislation – those businesses employing fewer than 15 individuals receive a few special considerations but still must adhere with most. This can be challenging given the complexity of these laws, even for companies who employ human resources professionals.
The most common areas where mistakes are made include:
- Incorrect payment of wages (generally because Awards are incorrectly applied or misinterpreted)
- A lack of/up-to-date employee policies and procedures
- Performance management and dismissal
- Managing inappropriate workplace behaviours
- Incorrect engagement of casual and maximum-term employees
The Fair Work Act 2009 is the main legislation governing employment conditions in Australia, however since 2017 there have been 10 amendments to the Act (five in the last four years), which include changes to the definition of casuals and the implementation of Respect@Work in the Sex Discrimination Act and positive duty.
It is essential to recognise the challenges of keeping up with employment laws and identifying where training and support is required. The Australian Industry Group provides useful resources, however outsourcing functions such as training, payroll, development of policies and procedures and investigations are practical ways to mitigate risk.
Contribution to the Sustainable Development Goals
In Australia, the government has taken steps to address Environmental, Social, and Governance (ESG) issues through policies, regulations, and incentives, many of which tie in closely with the SDGs. This means any organisation supplying to or wanting to supply to the government has had to look at their policies and approach. As this impacts across the supply chain, the government’s approach has been adopted by many organisations.
The United Nations General Assembly adopted “Micro-, Small, and Medium-sized Enterprises Day” to raise awareness of the contributions of MSMEs to the achievement of the United Nations Sustainable Development Goals (SDGs) across all seventeen goals.
However, they have highlight Goal 8, which focuses on promoting inclusive and sustainable economic growth, employment and decent work for all. MSMEs play a crucial role in increasing employment opportunities, especially for young people and women, reducing informal employment and labour market inequality (particularly in terms of the gender pay gap), promoting safe and secure working environments, and improving access to financial services to ensure sustained and inclusive economic growth. Women’s small business ownership has grown by 77.4% in Australia since 1991, although it still only equates to 35.4% of the total.
Another example of how MSMEs contribute is evidenced through the latest Indigenous Business Snapshot, which shows Indigenous businesses contribute more than $16 billion to the Australian economy, employing 116,795 people and paying $4.2 billion in wages.
The Australian Government’s Indigenous Procurement Policy (IPP) aims to increase economic participation of First Nations Australians by driving demand for their businesses and services through government procurement. Supply Nation’s list of verified indigenous businesses consists primarily of SMEs. For small, medium and large organisation’s alike, this provides an opportunity to support Aboriginal and Torres Strait Islander businesses and align with government procurement preferences at the same time.
The Australian Government's recent focus on mandatory sustainability reporting for businesses presents opportunities for SMEs. Larger organisations are working with SMEs to meet sustainable procurement goals by sourcing locally, which helps to reduce carbon footprints and promote economic growth and supporting their work addressing the SDGs.
SMEs in Australia are increasingly adopting ESG practices to operate sustainably and responsibly and grow their business. By integrating sustainability into their operations, SMEs can reduce costs, enhance regulatory compliance, and strengthen brand recognition.
If you’re an SME looking for support, contact Bayside Group today.
