Staff Reductions and Pessimism: SMEs Struggle with Order Slump

The small and medium-sized enterprises (SMEs) of the country are not emerging from the crisis despite initial stabilization tendencies. According to the current business climate barometer of the Austrian creditor protection association Creditreform, the recovery after two years of recession is absent. "Orders and revenues continue to decline, and staff is being reduced in many places," the autumn study reveals. The majority of the 1,400 companies surveyed also look pessimistically into the future.

Domestic Small and Medium-Sized Enterprises Deep in Crisis

For three years, the climate barometer for the middle class has been in negative territory. Currently, it stands at minus 8.2 points, after minus 9.9 points in the previous year, according to the announcement. "A skeptical basic attitude prevails in all economic sectors. A quick economic recovery is not to be expected," states Creditreform Managing Director Gerhard Weinhofer. "Initial stabilization tendencies are not enough to reverse the trend," he adds.

Order Situation Tense

More than a third of entrepreneurs reported declines in orders, only about 13 percent were able to record an increase. Additionally, according to the study, a good third of the companies recorded revenue losses, while only 16 percent were able to increase their revenues. Factors such as high energy prices are said to be holding back the companies. Revenue expectations remain negative for the coming year as well: Only 12.2 percent of respondents expect a revenue increase (previous year: 14.6 percent), 28 percent expect declines (previous year: 36.4 percent).

Additionally, only 10.8 percent of the surveyed companies reported increasing profits, while 42.3 percent had to accept losses. According to Creditreform, it will still take time before profits rise again. Meanwhile, the proportion of companies with weak equity capital has risen to the highest level in six years: 19.7 percent of companies have an equity ratio of less than 10 percent. The weak economy also affects the willingness to invest. Only just under 30 percent of companies plan investments (2024: 31.4 percent; 2023: 42.8 percent).

Staff Reductions Continue

In the past six months, around 30 percent of companies have reduced staff, only 10.8 percent created new jobs. According to the study, the construction industry is particularly affected. Only 7.2 percent of companies plan new hires.

More than half of the companies critically assessed the government's economic policy. The most pressing economic policy issues cited by the companies were bureaucracy reduction (80.4 percent), inflation and rising prices (70.2 percent), and the shortage of skilled workers (53.3 percent).

(APA/Red)

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