Australian businesses reported a strong recovery from the pandemic in 2022 and more than half plan to increase employment, according to a report from Ai Group (The Australian Industry Group), which collected data about business recovery and business plans going into 2023. Ai Group is Australia's peak industry association.

The 2023 CEO Expectations Survey was administered in October and November 2022 of 280 businesses. It found that in 2022, 41% of businesses improved employment, and in 2023, 55% plan to increase employment. This is despite only 34% of businesses reporting improved profit margins, while 45% saw a decline.

Skill shortages and a tight labour market in 2022 drove up investment in staff training which saw a 47% increase. In fact, 90% of CEOs expect to be affected by staff shortages in 2023. They plan to invest in staff training and development to grow their in-house skills base. Staff training is now the second highest reported business investment priority. In 2023, more companies at 50% plan to invest in staff training.

With expectations that shortages will continue in the medium-term, businesses are adopting a three-pronged strategy: 44% plan to increase wages and benefits, 38% will increase staff numbers, and 36% will retrain or upskill.

Meanwhile, the Ai Group projects wage growth to accelerate from 3.1% in 2022 to 3.9% this year. High wage costs ranked first or second among 22% of businesses that will most likely inhibit growth in 2023.

Other factors most likely to inhibit growth include increased cost at 47%, skilled labour shortages at 36%, overall labour shortages at 26%, and supply chain disruptions at 19%.