The Australian Government’s JobKeeper scheme has been of great support to businesses nationwide during the pandemic. With JobKeeper payments now reduced and the end of the scheme looming, Let’s Talk about what it can mean for businesses…
Rob Smith, Partner, McGrathNicol
JobKeeper has been the most significant and successful COVID-19 business support measure, providing substantial cash and employment support to impacted businesses across Australia through 2020. JobKeeper payments reduced again on 4 January 2021 to no more than $1,000 per fortnight and the scheme is currently set to expire on 28 March 2021.
Without significant new government financial support, many businesses that continue to be adversely impacted by COVID-19, particularly in the tourism, travel, wholesale and retail industries will come under renewed liquidity and employment pressure from April this year.
We anticipate that asset-light small to medium sized businesses, with less funding options available, will be most affected. Solutions may be to permanently reduce employment, seek further concessions from suppliers, landlords and lenders, or to take more drastic measures such as closure or insolvency. Such actions will have a knock-on effect, impacting employment, liquidity and working capital through industry value chains and the broader economy.
Tracey Dunn, Associate Director, RSM Australia
While some businesses were hit hard by COVID-19 lockdowns, many have already transitioned away from JobKeeper in the second round. Most other businesses will have been planning in advance for the end of JobKeeper.
Businesses that are experiencing cashflow issues at this point may need to look at the business more broadly. It’s possible that underlying business issues were compounded by the COVID-19 crisis, magnifying and accelerating the impact of these issues for those businesses. If small businesses are likely to struggle to meet their overheads without JobKeeper, they should speak with their advisor to identify options. Restructuring could help the business emerge from this crisis stronger than before. In some cases, unfortunately, it may be that the business needs to be wound up.
Small businesses owners who are concerned about the end of JobKeeper should speak with their business advisor or insolvency advisor as soon as possible to maximise their chance of success.
Tom Cornell, Head of Assessments APAC, HireVue
Following the Government’s comments, JobKeeper will not be extended beyond its current deadline and instead Australian businesses will lose their safety net during March. For many businesses this will require a reassessment of their talent needs in order to ensure that all current and future hires can be adequately supported.
This may lead to HR teams having to make difficult decisions. However, the core thing to bear in mind is the long-term health of the overall business. The current optimism around economic recovery is based on a range of factors, including the effectiveness of COVID-19 vaccines. Hiring talent into an unstable and potentially short-term environment comes with its own set of challenges and HR teams would be wise to take a cautious approach in the coming months.
On the flip side, companies fortunate enough to be in a position to hire, will have an expanded pool of talent to draw from, so will need to effectively assess potential candidates to ensure they are securing the right fit for the business. Either way, this is not a time to be making knee-jerk decisions, but instead to be acting strategically.
Gordana Redzovski, Vice President APAC, Vend
Few industries were harder hit by the pandemic than retail, so for many who relied on it the impending end of the government’s JobKeeper program represents a daunting cliff edge. Despite that, though, the local retail industry has, and continues to make strong strides, with the proliferation of ecommerce, the “shop local” sentiment and easing social distancing restrictions representing a platform that could alleviate some of the concerns about its conclusion.
That’s not to say it’ll be easy, though, so ensure you have a solid understanding of your business’ current financial position. Look at the past 12 months as a whole and then identify where you might be able to cut costs or implement more cost- and time-effective processes. If, for instance, you’re wasting time on manual admin tasks, consider how you might be able to adopt digital systems and processes to save both time and money in the long-run. Consider, also, whether flash sales, loyalty programs or discounts for recommending friends could incentivise a short-term spike in custom.
Jonathon Colbran, Partner, RSM Australia
Government stimulus funding has kept Australian small businesses afloat during the COVID-19 disruption. JobKeeper was a highly effective cashflow measure but, although it was extended a number of times, it was always intended to be finite. Businesses should therefore be prepared for it to end.
Unfortunately, it’s not clear that business owners have proactively planned for this. In an environment where many significant creditors have deferred debt repayments, businesses need to prepare for the time when these debt repayments will re-commence or return to pre-COVID-19 levels, since most debts were only deferred, not forgiven. When the government stimulus payments eventually stop, this is likely to affect cashflow.
Businesses continue to face risk from COVID-19 and other, unforeseen disruptions. It’s essential to work with a business advisor to plan for uncertainty, find ways to protect cashflow and explore all options such as restructuring to protect and improve the business.
Dunya Lindsey, COO, Wiise
The end of JobKeeper should be a sign that everything is getting back to normal. But as any business knows, “normality” is still a long way off. Australia has so far weathered the impact of COVID-19 better than many other nations. But certain industries have been particularly hard hit by continued travel restrictions. Travel and tourism, international education, freight and logistics will still be severely impacted even as JobKeeper ends.
This is a crucial time for businesses to take advantage of the right technology solutions. Having robust accounting and ERP software is critical to generating the data and insights needed for smart decision-making. This will boost business agility and help them keep a close eye on cashflow, as well as ensuring there is enough capital to rebuild businesses and meet deferred payments. Employment forecasts seem more positive, with labour force figures showing continued improvement since the depths of recession in June 2020. But the recovery is not evenly spread. For vulnerable businesses, still struggling and exposed to uncertainty, ongoing support measures will be critical.
Simon Le Grande, Director Of Marketing And Product Management, Lightspeed
With the hospitality industry still facing so much uncertainty, there is hope that the federal government may continue to support the industry by extending JobKeeper or replacing it with a hospitality-specific scheme such as ‘HospoKeeper’, currently being pitched to the treasurer by Restaurant & Catering Australia.
However, if tough staffing decisions do need to be made by business owners, making the right decisions will be paramount. It will be critical to understand how business has changed over the past six months, including: What are now the busiest hours of the day, and days of the week? What is the new order channel split (eg: dine-in vs. takeaway), and how does this vary by hour? Getting the mix of skills and coverage right when rostering will be more important than ever.
Hospitality owners should also consider implementing emerging technology to generate additional staffing efficiencies. Connected, cloud-based POS systems enable access to tools that can bring efficiencies to roster management such as digital ‘order at table’ solutions, and rich, real-time analytics features that empower smarter business decisions