CCIWA Chief Economist
Aaron Morey
The optimism of regional businesses has dampened as they struggle to find skilled and unskilled workers. According to the latest CCIWA Regional Pulse Report, ongoing skills and worker shortages are expected to cost regional businesses around $120,000 each.
Just one in three regional businesses (34%) expect strong economic conditions to last the next 12 months, down 18 points. Expectations of weaker conditions more than doubled, up 17 points to 28%.
Despite growing pessimism in the longer term outlook, confidence in the current state of the economy is still strong. Businesses in the regions expect the economic sunshine to last the next three months, during which three in five (62%) anticipate better conditions. Businesses in the Pilbara (82%) and Mid-West/Gascoyne (64%) have the greatest optimism, reflecting ongoing confidence among the miners, and relief among agriculture businesses.
The chief concern for both regional and metro businesses is WA’s chronic shortage of skills and workers. Seven in ten (70%) regional businesses are impacted, particularly those in the Pilbara (88%) and Mid-West/Gascoyne (79%) where there is reliance on seasonal and skilled workers. Nearly half (49%) of WA’s regional businesses expect to need more staff in the next three months, particularly in the Pilbara (63%) and the Mid West/Gascoyne (57%). The impact of the skills shortages over the year are expected to be $247,000 per business in the Pilbara, or $130,000 in the South West.
The other barriers to growth in WA’s regions are rising operating costs (61%), and the prospect of a COVID outbreak (49%). Pilbara businesses have the highest degree of concern about operating costs (88%), while concern about COVID is higher in the Mid-West/Gascoyne (64%).
Two in five (41%) regional businesses report declining profits this quarter. A higher proportion of businesses expect profits to fall in the next three months, compared to those who expect improvement.
Overall the results mirror sentiment among metro businesses, where concern about declining iron ore prices, a shortfall of 55,000 workers and supply chain issues drove down confidence by 19 points.
