Inflation to affect wages and wage growth: how outsourced accounting services can prove an aid in unsettling times

Are you worried about rising inflation and its effects on your business?

Whenever you see the news, you are left with no escape plan but to get hit by inflation. There is no doubt the situation has been running in the minds of people worldwide. Everyone wants to do something, but no one can step up and fight.

Inflation has been rising for quite a few months now, and the workers’ pay cheques are yet to catch up. At the same time, certain sectors have seen some great wage growth. But if the inflation rates keep going up, eventually, the CTC (cost to the company) will have to increase, or the standard of living for many people will come down.

According to the Reserve Bank, Australia’s real wages are set to shrink as much as 3% in 2022 as salary increases lag behind and might only catch the graph till 2024. Businesses are forced to cut down costs to retain the business’s financial status while focusing highly on strategies to curb inflation in the coming years.

Is there a way to sail through these unsettling times?

The good news is that outsourcing accounting and taxation services can be a savior for your business and clients.

But before that, it’s important to identify the factors contributing to inflation.

What Is Happening In Australia?

As you know, inflation refers to the surge in price over a period of time; the situation has become complex now. While Australia’s economy remains relatively resilient, aided partly by surging prices that boost the country’s national economy.

Here are a few reasons for this inflation in Australia:

• The RBA has mentioned the resilience of the country’s economy is particularly evident in the labor market.

• Over the five years, a significant slowing in wage growth has been seen in Australia, which also badly impacts the country’s economic growth.

• CPI increased to 2.1% in the March 2022 quarter with a continued scarcity of building supplies and labor, increased freight costs, and prices climbed a record for newly built dwellings to 13.7%

• The Australian Bureau of Statistics (ABS) credited the increase to fuel price costs. The fuel prices notice a gain of 35% for the year.

• One of the strange but true reasons is growth in wages for women has become quite stronger over men in the last five years to November 2018- that is an annual increase of 2.8 per cent compared to an average of 2.1 per cent for men. This has significantly decreased wage growth in sectors like mining and construction.

• The wage ratio shows annual growth of 1.6 per cent and 1.9 per cent, respectively, in December 2018- while other industries grew at an average rate of 2.2 per cent.

In a nutshell, there is an increased financial burden on businesses demanding a proactive approach to reducing costs and expenses.

How Accounting Outsourcing Services Help Deal With Inflation In Australia?

1. Outsourcing helps you save time and cost

You can streamline your business operations by utilizing advanced technology and outsourcing services. In addition, hiring employees can become tedious in recent times as companies might not be able to offer the expected, and employees may not be feasible with the wage.

2. Outsourcing recruitment can better manage costs

Outsourcing is an effective way for businesses to experience significant cost savings. With outsourcing, companies can have a better perspective on how to manage cost-savings and wages in important areas.

3. Allows you to reduce team size

It’s a great option for small businesses and startups to scale and grow their business without substantial capital investment. Also, outsourcing allows businesses to eliminate personnel and equipment costs.

4. Outsourcing has the power to strengthen relationships.

When the world is fighting a battle against inflation, organizations find it difficult to grow their business. Outsourcing has the power to establish strong relationships between two companies and work together effectively in pursuing common goals.

Fight your way through inflation with outsourcing accounting

Undoubtedly, inflation is a difficult time for businesses. Thankfully, outsourcing your business’s accounting functions could be the answer to unsettling times of wage growth and inflation. It provides the ability to forecast savings and provide lucrative insight into following best business practices for the organization’s growth. To survive such uncertain times, you should consider Fourfold Global to minimize risk and focus on cost-saving.