COVID-19 and its impacts has caused a “national drag” on the Australian economy, with 85 per cent of businesses impacted by the pandemic in August showing higher more effects than in June and July, according to national employer association Ai Group.
In its Business experiences of the COVID-19 pandemic March to August 2020 report, it identified the impacts, responses and requirements of businesses as a result of the COVID-19 pandemic. Ai Group received around 1,300 reports from businesses about their experiences between March and August 2020.
The report found that the most frequently reported impact on business from COVID-19 was a sharp drop in demand. This tapered off somewhat in July and August, but was replaced by heightened concern about state border closures, Victoria’s second wave of COVID-19 cases and restrictions (affecting 19 per cent of all businesses reporting to Ai Group and 32 per cent of Victorian businesses in August) and inability to visit clients.
Nationally, production was also hampered by international and interstate border disruptions to supply chains and freight services. Disruption to supply chains occurred early in this pandemic, with 15 per cent of businesses reporting disruptions in March, including complications with various inputs, imports and freight.
The severity of disruption reduced in June and July but crept up again in August. Across the country, 11 per cent of businesses said supply chains were being disrupted again in August, including in Queensland (14 per cent of businesses reporting to Ai Group), New South Wales (12 per cent) and Victoria (eight per cent).
State border restrictions inhibited business for 12 per cent of respondents nationally.
Increased workloads due to new OH&S requirements and increased costs due to PPE, distancing and other measures were also reported by many businesses, resulting in reduced productivity and/or heightened staff anxiety in the workplace.
In response to these impacts, businesses initially focussed on risk mitigation and workplace health and safety. They moved staff to home-based work where possible and developed COVID-19 safety plans.
The report identified that as the crisis wore on, reduced demand and revenue forced more businesses to cut work hours and/or employment. The support of JobKeeper helped to stem job cuts from May, but did not stop them entirely. From April, the sharp drop in demand saw more businesses seeking financial support.
From May, businesses shifted towards adjusting work practices, work sites and product offerings to accommodate ‘safe working’ requirements. In August, their focus shifted to adjusting longer-term business plans and strategies.
Adjusting business plans became a primary response for 23 per cent of businesses nationally in August. In Victoria, 27 per cent of businesses adjusted their planning in August, as did nine per cent in New South Wales and 38 per cent in Queensland.
Ai Group CEO Innes Willox said, “Only 15 per cent of businesses told us they were not affected in some way by COVID-19 in August. The 85 per cent of businesses impacted by the pandemic is higher than in June and July reflecting the national drag on the economy related to the Victorian lockdown and the renewed difficulties with interstate movement.
“The Melbourne lock down was affecting demand in Victoria and this cascaded across the Australian economy. Markets and supply chains weren’t confined to single states and, while not locked down themselves, the inability for non-Victorian companies to conduct usual business or access key suppliers and customers was hurting companies of all sizes.
“The hoped-for lifting of restrictions in Victoria couldn’t have come soon enough. The relaxation of border restrictions elsewhere will also have a positive affect but, with the success in reducing new cases, most states need to pick up pace of reopening to help hasten the recovery of employment and activity.”
Nationally, 19 per cent of businesses said the second wave of restrictions in Victoria that came into effect on 2 August had directly impacted them. Of those, 32 per cent were Victorian businesses, 12 per cent in New South Wales and seven per cent in Queensland.
The report also identified that businesses want a stronger focus from national and state governments on infrastructure development, local procurement and investment.
Read the full report here.
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