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Business owners will hire less under Labor

Last Updated: Friday, 31 August 2007

By Amanda Gome and Mike Preston

Twenty-three percent of 375 small and medium business owners who make hiring and firing decisions said they will be more reluctant to sack staff if Labor gets elected.

They are also less likely to hire staff: 33% say they will be more reluctant to hire if Labor wins the federal election.

Yesterday in delivering the detail on the industrial relations policy he will be taking to the next election, Opposition leader Kevin Rudd confirmed that Labor would abolish the unfair dismissal exemption for small business. Labor would only give employers with fewer than 15 workers a right to dismiss an employee within a year of hiring.

The SmartCompany.com.au/Roy Morgan survey, done yesterday and today, shows that business owners hate sacking staff – 47% say it is the worst part of being a business owner.

Nevertheless sacking is a fact of life, with 15% saying they have sacked a staff member in the past three months. Of those who were sacked, the majority (65%) were not on probation. In fact almost a third of those who had to be sacked were long-term employees.

This reveals that the majority of staff sacked by small and medium business owners are not new employees.

This flies in the face of Labor leader Kevin Rudd’s claim that a year is enough time to make an evaluation about whether staff fit into a new business.

The survey also found that business owners sacked staff because of bad attitudes (34%) and lack of skills (24%). About 16% sacked staff because roles changed and staff couldn’t or didn’t want to learn new skills, while 13% were sacked because of theft or inappropriate behaviour.

True redundancies accounted for 8% of exits, and staff costing too much resulted in 5% of sackings.

Rudd has long claimed that low unemployment was not tied to Howard’s WorkChoices reforms but the survey results suggest that when there is a risk of an unfair dismissal claim being made against them, employers are not only more reluctant to fire but also to hire.

Australian employers are slow to sack staff. But making it even harder for them by re-introducing the risk of unfair dismissal claim is likely to send jobs overseas.

Neil Bolton, chief executive of software developer Recruitment Systems, who has spent six years growing the business and has 15 employees, says: “We are trebling or quadrupling over the next two years and right when we’re going to hit this huge expansion we’re being thrown an incredibly high risk scenario where we’ll have to be very, very circumspect about hiring.”

Bolton says he has fired about two staff in the last six years. “You don’t want to do it, but if you have to, you have to.” But he says he will be concerned about hiring with Labor’s IR policy.

“I saw Rudd on TV last night, and hearing the summary today, it was guaranteed that I couldn’t take the risk of employing the way I have been employing.”

Instead he will focus on employing overseas in Hong Kong, Auckland and Dubai. He adds: “I didn’t really care too much about who got elected. I’m apolitical, but I am sufficiently concerned about this to change my thinking.”

Kosmas Smyrnios, professor of marketing at RMIT University, who studies fast growth in small and medium businesses, says they are the seed bed of employment, creating a massive amount of jobs.

“One of their favourite sayings is hire slowly, fire fast. Having to carry people who are not performing or have a bad attitude is hugely detrimental to an organisation. These companies have a strong vision and strategy and they want people who can share their attitudes. If people do not, it spills over into the teams, affects productivity and the bottom line.”

What do you think? Email feedback@smartcompany.com.au

For more stories on managing people go to Growth Resources Managing People.

For  more stories on sacking staff go to Moving the Wrong People on.