Employers cut headcount, reduced non-essential travel amid crisis
One in four businesses in Australia implemented changes to their workforce amid the fuel crisis triggered by the conflict in the Middle East, according to new government data, which showed the widespread impact of the geopolitical conflict overseas on local businesses.
A new poll from the Australian Bureau of Statistics (ABS) showed that 28% of employers in the country made changes to their workforce in response to current fuel prices and availability.
This includes 15% of businesses that reduced or suspended non-essential travel activities to reduce fuel consumption, as well as nine per cent that reduced the size of their current workforce.
According to the findings, medium-sized firms were most likely to reduce the size of their workforce (13%), compared to small (9%) and large (3%) businesses.
The report further found that 33% of firms that cut their current workforce were from the Accommodation and Food Services industry.
On the other hand, businesses that were most likely to reduce or suspend non-essential travel were most likely from the industries of:
- Agriculture, Forestry and Fishing (33%)
- Mining (20%)
- Professional, Scientific, and Technical Services (18%)
- Manufacturing (18%)
Fuel shock impact in Australia
These workforce changes come after Australia suffered a major shock in the availability and costs of fuel following the conflict in the Middle East, which led to the closure of the Strait of Hormuz to most commercial shipping.
The strait, which has been blocked since late February, is a major maritime choke point for world energy trade, with about 25% of the world's seaborne oil trade and 20% of the world's liquefied natural gas (LNG) previously passing through it.
The ABS report showed that 72% of Australian firms suffered negative impacts from the crisis.
"Businesses across all industries were impacted by rising fuel costs from global volatility and ongoing supply chain disruptions," said Tom Lay, ABS head of business statistics, in a statement.
"One in six businesses experienced disruptions in their supply chain, with transport, logistics, agriculture, and small businesses among those most affected."
According to the ABS report, 36% of businesses saw revenue drop over the past four weeks, while 27% expected revenue to fall over the next four weeks.
Change in business operations
Meanwhile, the report further found that half of businesses saw their operating expenses rise because of the crisis, with fuel prices and freight and delivery costs the most frequently reported reasons.
In response to the crisis, 48% of employers said they absorbed cost increases, while 11% increased prices. Other employers also reported that they had to change or delay production targets, schedules, and volumes, as well as implement a fuel surcharge or levy (6%).
The findings come amid previous warnings from businesses regarding the impact of the Middle East crisis.
The Australian Industry Group warned in March that the fuel crisis is "already significantly biting into productivity and output with greater deterioration to come."
The group, which represents employers nationally, also warned about existing supply chains becoming more fragile and unreliable, threatening to ripple through the economy.
