Job cuts sweeping through sections of the economy could prompt more people to work for themselves, according to a small business group, with hospitality and financial services identified as sectors set for growth.
Peter Strong, executive director of the Council of Small Business of Australia, says people may be more inclined to start their own business as job cuts hit certain industries, particularly manufacturing.
“Hospitality is an area where you could look. With the retail changes that are occurring, people are changing the way they eat [by choosing to eat out rather than shop],” he says.
Strong says service-based businesses, particularly those relating to retail and finance, could also see a surge in demand as people struggle to adjust to economic shifts.
His comments come in light of an announcement by manufacturing giant BlueScope Steel that it will end its export business and axe 1,000 jobs from its workforce.
The strength of the Australian dollar, which remains comfortably above parity against the US currency, was a key factor behind the move.
BlueScope is the latest in a string of companies to announce job cuts in recent weeks, including Coca-Cola Amatil, Westpac, Premier Investments and Ten Network.
Merrill Lynch strategist Tim Rocks said earlier this week there are “100,000 job losses in the pipeline”, claiming the unemployment rate could rise to 6% by March.
According to Rocks, job losses in retail and construction are inevitable.
However, the Productivity Commission has warned the Federal Government against propping up struggling industries, arguing it will leave the nation worse off in the long run.
Similarly, Bill Mountford, of the Victorian Government’s Competition and Efficiency Commission, told The Australian there is no role for industry policy aimed at supporting specific industries.
“Productivity is about individual businesses, not industries, and is about the innovation, entrepreneurship and the linkages and networks that they and their customers have,” he said.
In light of the news, Strong says small business owners need to review their business plans and operations on a regular basis – preferably weekly – and should consider talking to other small business owners in their sector.
“If you’re not a member of an association, consider joining one. They’ve got a lot of good information to help you through. Business enterprise centres are another good option,” he says.
Strong says employers have a responsibility to communicate with their staff about job security.
“If things are down, you’ve got to start looking at your staffing levels… The people you work with see you being stressed anyway, so you might as well talk about it,” he says.
“Say to your staff, these are the figures and I feel confident you’ve got work for at least the next six months.”