COVID-19 News & Views

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47% of SMEs expect salary increases to be frozen for at least 12 months

Updates to this research will be published fortnightly to track the impact and response to COVID-19. View Previous Wave.

The latest wave of the COVID-19 SME Research Tracker shows positively that the proportion of SMEs reporting a decline in revenue has decreased to 67%, from previous highs of 78% reported a month earlier. Consequently, 32% of SMEs are now at pre-COVID revenues compared to just 24% in mid-July.

Table 1: Decline in Revenue Due to COVID-19

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However, expectations for the short term continue to slide, with 28% of SMEs expecting declining revenues over the next 4 weeks, compared to the 24% reported in the previous wave. This rises to 41% in Victoria and hence the level of support for the Victorian Government has continued on a downward trend with only 41% satisfied with their performance, compared to 43% who are dissatisfied.

Table 2: Future Revenue Expectations by State

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The majority of SMEs expect the pandemic to have a long term impact on the global and Australian economies and hence it is no surprise that 47% expect salary increases to be frozen for the next 12 months. However, it is very encouraging to note that wage increases in the retail sector are likely to resume earlier, underlining a level of confidence driven by increasing sales.

Table 3: Negative Impact of COVID-19

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Cashflow remains a major challenge for 35% of SMEs and therefore many are looking to extend loan deferral periods or restructure loans to reduce repayments. We can also report that nearly 20% of SMEs have required additional finance during the pandemic with another 23% indicating a need to borrow funds over the next 6 months.

Table 4: Additional Finance

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Sentiment remains negative with little confidence over the short term. However, there are a few green shoots in relation to recovering revenues and an underlying positivity in the retail sector, which should flow into other sectors such as production and distribution.

Hopefully as the number of new cases continues to fall in Victoria, these green shoots will develop, and we will start to see a more consistent recovery. However, it won't be easy, and therefore SMEs will need continued support from Government, Banks and importantly their employees.

Please click on this link to access the full report including subgroup analysis by industry sector, size of business and State. ACA Research and TEG Insights will publish updates of this research to track the impact and response to COVID-19. Hopefully the results will become more positive as we work through this crisis together.

Topics: Market Research Healthcare Research Thought Leadership Research COVID-19 SME Tracker