By Poppy Johnston
Surveying of directors suggests company boards are still concerned about workforce shortages but other economic issues are taking prominence.
Labour shortages have given way to cost of living challenges as the top economic challenge worrying company directors.
An index prepared by Australian Institute of Company Directors sampling the views of more than 1000 of its members found 40 per cent believed living costs was the leading economic challenge facing businesses.
Another 35 per cent said labour shortages was the top concern, a decline from the 43 per cent that selected this challenge in the survey conducted in the back half of 2023.
Demand for workers has been easing from the highs experienced in the early days of the pandemic recovery, reflecting improving labour supply as reopened borders allowed migration to resume.
Still, eight in 10 directors responding to the questions between February and March agreed there were skills shortages in the workplace.
One in three were optimistic artificial intelligence systems and automation could help resolve the problem.
Directors questioned in the survey were concerned about productivity growth, with 33 per cent flagging it as their top economic challenge.
The survey recorded a further deterioration in trust in the federal government, with only 27 per cent agreeing it understood business and more than half disagreeing with the statement.
This was the fifth consecutive decline since late 2021.
AICD managing director and chief executive officer Mark Rigotti said the government’s mandatory climate reporting regime was among their list of concerns worrying company boards.
“Directors are also feeling the weight of regulation and uncertainty around non-financial considerations such as cyber security, AI governance and the introduction of the government’s mandatory climate reporting regime,” he said.
On the economic climate, directors were less upbeat about the immediate economic health but more optimistic about the longer term outlook.
Mr Rigotti said uncertainty was clouding the way forward.
“The RBA holding interest rates steady for the moment has not been enough to ease cost pressures and there’s a level of uncertainty about which way things are headed,” he said.
“It’s been a difficult period to navigate and the way forward from here is not instantly clear.”
