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Survey finds that Illawarra Business Confidence is Up but Skills Shortage is Holding Back the Region

Release Date: 30/10/2014
Illawarra businesses are reporting improved business conditions and renewed confidence in the State’s economic performance, according to the latest NSW Business Conditions Survey of 110 Illawarra businesses conducted by the NSW Business Chamber.
“Perceptions of the State’s economic performance improved significantly amongst Illawarra businesses this quarter. More than a third of businesses reported that the State’s economy had strengthened in the past three months, an 11 percentage point increase since June, and 43% reported that they expect the economy to strengthen in the December quarter.
“The improved NSW economic conditions provided some much-needed relief for Illawarra businesses who have been doing it tough. While more businesses continue to record a decline in profitability than an improvement, the proportion of Illawarra businesses reporting a decline in profits fell by 9 percentage points. ”   
Ms Murphy said that although the NSW Business Conditions Survey showed improvements in business conditions, the results confirm recent reports of a widening gap between knowledge generated through the education and training systems, and the skills demanded by employers particularly in the Illawarra.
“The percentage of Illawarra businesses reporting that they do not have access to suitably qualified staff doubled to 24% in just one quarter.”
“As we argue in our policy blueprint for the upcoming election ‘Unfinished Business: Towards 2015 and beyond’, a broad ranging review of post-Year 10 education and training in NSW is desperately needed to overcome the skills shortage and ensure the Illawarra region thrives again,” Ms Murphy said.
“There was a three-fold reduction in the percentage of Illawarra business that had to reduce staff numbers in the September quarter compared to the June quarter. Also less than half as many local businesses believe they will need to have redundancies in the December quarter compared to last quarter’s survey.  Given our regions historically high level of unemployment the stabilising in staff numbers we are experiencing is a very positive sign” said Ms Murphy. 
Government policy is not helping Illawarra businesses. Very few local businesses are seeing any positive impact from policy changes and, as a result, some are even planning to leave the region.
One Illawarra business owner explained “the reluctance of some government organisations to support innovation in infrastructure requirements despite proven quantifiable productivity and cost savings is disappointing. This constraint will probably lead to the business relocating to Victoria and QLD. The level of red tape is a major constraint on and cost to business.”
Despite the softening of the bad times reported in this survey, significant levels of competition and pressure to keep costs down continues to impact on local businesses. A quarter of Illawarra businesses mentioned that prices charged to customers is having a major negative impact, up more than 10 percentage points in a quarter.
Ms Murphy added “Illawarra businesses are resilient and know that innovation is the best way for us to compete with almost half of the businesses surveyed saying that increasing sales through better products is a major priority for them.”   
“It’s been tough in the Illawarra business community and it is good to see some clear signs of change, however, the survey shows that there is still lots of work to do in skills and Government policy to ensure our region thrives again” said Debra Murphy, CEO Illawarra Business Chamber.
Media Contact: Julia Frith 0417 135 858

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