TWENTY-FIVE per cent of small to medium-sized businesses in NSW expect to sack staff within three months, a survey by the NSW Business Chamber has found.
The findings came as the Prime Minister, Kevin Rudd, conceded the economy would fall into recession for the first time in almost two decades.
"The severity of the global recession has made it impossible for Australia to avoid a further period of negative economic growth," Mr Rudd told a jobs forum in Adelaide.
"The worst global economic recession in 75 years means it's inevitable that Australia, too, will be dragged into recession."
Also yesterday, the Commonwealth Bank defied Government calls to pass on interest rate cuts and said it would raise its fixed rate mortgages by between 20 and 45 basis points from today.
NSW has the highest jobless rate in the country, at 6.9 per cent, but that is expected to increase.
Phone calls by business to the chamber seeking advice about about termination and redundancy have increased 60 per cent since the middle of last year.
One in four of the 440 companies surveyed said they had reduced staff hours in the first three months of this year.
Another 24 per cent say they expect to sack someone over the next three months while only 9 per cent expect to hire staff.
"Many employers are loyal to their employees and are doing their hardest to keep their staff on by altering work practices and reducing hours but it's an uphill battle in this economic environment," said the chamber's chief executive, Kevin MacDonald.
This is despite an official survey released yesterday which found prices paid by business fell sharply in the first three months of this year.
The Bureau of Statistics' "producer price index" found prices paid by firms fell 0.4 per cent - the second biggest drop in the survey's 10-year history. Prices were up 4 per cent over the year - although this is a slower pace than the 6.4 per cent growth rate clocked in the previous survey.
Yesterday was the first time Mr Rudd had used the word recession; it was an admission the Government now expects growth for the March quarter to be negative. The December quarter was negative and a recession is defined technically as two successive quarters of negative growth.
The Government will argue circumstances would be worse if not for the two stimulus packages, worth $52 billion.
"The challenge for government is to cushion the impact of the recession on business and jobs through the actions we take through our economic stimulus strategy," Mr Rudd said.
Inflation figures due tomorrow are expected to show the rate back in the Reserve Bank's target band of 2 to 3 per cent.
Falling prices mean companies are under less pressure to increase the prices consumers pay and open the way for discounting to tempt wary customers.
The NSW Business Chamber's survey confirms concern about growth have replaced concerns about rising costs.
Nearly half of firms surveyed believed business conditions had deteriorated in NSW in the previous three months.
"With nearly one in every two businesses reporting deteriorating business conditions, the need for us to kick-start the NSW economy has never been more urgent," Mr MacDonald said.
Lack of access to new credit remains a pressing issue, with one in three NSW companies saying they had trouble being able to borrow from their bank.
"These figures show that the financial crisis is far from over. More must be done to assist businesses in obtaining the finance they need to operate. The flow of credit is the lifeblood of the economy."
The Government has been softening up the electorate for a recession for some time. Chris Richardson, the director of Access Economics, said Mr Rudd had confirmed what the financial world had long known.
"It means nothing to markets," he said of Mr Rudd's declaration.
http://business.smh.com.au/business/one-in-four-firms-to-cut-staff-20090420-acp8.html
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