Consequences of change

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Much has been made lately of the impending consultation about and implementation of labour law changes.

Some of these could be the most significant for some time and the effect on business and employees could be a signal for change.

This is happening while business confidence for small and medium-sized firms nationally and regionally is the lowest it has been for some time.

In fact, business confidence is the same as it was during the global financial crisis in 2007-08 and possibly getting worse.

There are several factors that play into this lack of confidence, and there are both onshore and offshore influences.

The interesting thing is that, while there is a real low in people’s perceptions of future profitability and growth, we still see sharemarkets hitting new highs, lending rates at historical lows and record low unemployment.

Again, we find ourselves in uncharted ground, trying to understand yet another paradigm that cannot be explained under old economic models.

One thing we are seeing though, after years of stagnation, is growth in many people’s wages.

Whether it be minimum wage rises or re-negotiating national agreements, there is increasing pressure on funding across the board.

It was sad to see that after making an announcement to go to the “living wage” with some pomp and ceremony only a couple of months ago, a large national retail firm is now looking at closing stores and making people redundant.

These are sometimes what people call unexpected consequences during a time of change. This comes with uncertainty and people starting to worry about their personal and employees’ welfare.

It would be interesting to ask those employees losing their jobs because of store closures if they would have been happier with a smaller wage rise and keeping their jobs.

I’m sure in the next year we will see inflationary pressure on goods, services and commodities. I hope this does not have a flow-on effect that reduces employment.