Some small businesses could be wiped out without immediate government help due to the Omicron outbreak, industry figures say, with hairdressers reporting up to 60% staff absenteeism.
The chief executive of the Australian Hairdressing Council, Sandy Chong, said seven of the 13 staff at her salon in the New South Wales city of Newcastle had recently tested positive for the virus, swelling sick leave payments at a time when wary clients were staying away.
“Paying for the personal leave is such a stress for every small business owner,” Chong said. She has operated her salon for 36 years and never previously encountered such a squeeze.
Turnover in the fortnight prior to Christmas was “just terrible” – down half on a normal year – while revenue declined two-thirds for the first week of 2022.
Chong said hairdressers in her national organisation were reporting between 20 and 60% absenteeism because staff had to work in close proximity to potentially infected customers.
“One of our members in Queensland has 40 staff, and she had all of them off except six. So she had to close down three salons,” Chong said. “Western Australia members are … absolutely panicking as to what’s going to happen when their borders lift.”
Hairdressers were not among the industries deemed last week by the national cabinet to be essential. As such, staff who had close contact with a Covid case were not granted a shorter isolation period before returning to work. In Victoria, a mandate requiring hairdressers to be at least double vaccination was also making it harder for salons and other businesses, Chong said.
Signs that companies are under strain are mounting. A survey of 2,000 members over three days earlier this month by the lobby group Business NSW found 40% “don’t have enough cashflow for the next three months”.
“Short-term targeted support for those businesses and staff that are
highly impacted is a must,” Business NSW’s chief executive, Daniel Hunter, said.
“Unlike previous surveys throughout 2021, where business owners felt the next quarter would get better, that isn’t the case this time as there are no government support packages in place.”
Small firms are more exposed to staff shortages than bigger ones because “they don’t have the luxury of moving workers from one cafe, say, to another one”, the head of the Council of Small Business Organisations Australia, Alexi Boyd, said.
Boyd said governments needed to develop targeted assistance rather than broad programs such as jobkeeper. “The support needs to evolve as the virus ebbs and flows,” she said.
The chief executive of the Australian Chamber of Commerce and Industry, Andrew McKellar, said businesses were “facing a triple blow of acute staff shortages due to isolation requirements, a supply chain crunch resulting in higher costs and a sharp drop in consumer activity”.
“One crucial measure that will boost business conditions is the provision of free and widely accessible rapid antigen tests to businesses, particularly small business, to ensure staff and customers can safely return to the workplace,” McKellar said.
For Kylie Clift, the past eight months have been “very tricky” for her Jim Jam Music business that offers music classes for infants to schoolchildren in the Hornsby region of northern Sydney.
Parents were either putting off having children or moving their families away from Sydney leaving the company with “very minimal new business”, Clift said. The Omicron wave had further sapped demand from loyal customers.
“Parents are keeping [the children] very close to them and so they haven’t been getting out and about – and that’s made a big impact on our business,” she said. “Our phones are dead.”
The lack of government help – unlike during formal Covid lockdowns – means her 16-year-old business may not survive. “It’s been really hard because not all businesses can bounce back fully from all this.”
The NSW treasurer, Matt Kean, who is also the local MP for Hornsby, is preparing a range of support packages, announcing a $40m-plus program on Monday to aid live events.
“There is no doubt we are facing an unprecedented challenge at the moment and it is having a significant impact on our economy,” Kean said.
“But we expect this downturn to be short-lived as this current Omicron outbreak reaches its peak and case numbers begin to subside.
“Towards the end of last year we saw NSW post a strong economic response to re-opening, and we are confident that the NSW economy will bounce back better after Omicron as it did with Delta.”
Labor’s NSW shadow treasurer, Daniel Mookhey, said the results of the Business NSW survey were “hair-raising”.
“Imagine the jobs we will lose if nearly half of NSW businesses run out of cash in four months’ time,” Mookhey said.
“Businesses should not blame the [NSW premier Dominic] Perrottet government for Omicron. But they should hold him to account for the poor state of preparation.
“RAT test remain in short supply. The rules around close-contact are confusing. And vital programs to help businesses have criteria that are laughably out-of-date.”
Chong said many businesses relied on the October to December period to get them through the first quarter of the following year. With Covid savaging the typically lucrative time of the year, 2022 was off to a grim start for many.
“Many of the salons don’t have any cash that could get them through more than one or two weeks,” Chong said, adding the daily uncertainty of not knowing whether staff or customers would turn up left salons under “extreme stress”.
