In their survey of 3,400 organisations, the Hays Salary Guide has found that the number of overtime hours worked by Australian workers has massively increased by a third over the past year. 57 percent of employees work significant amounts of overtime, with 29 percent working up to 5 hours, 18 percent working up to 10 hours, and 10 percent working over 11 hours extra per week. Just 43 percent of employees put in 2.5 hours of overtime per week or fewer.

overtimegraphic original 300x157 - Australia’s skill shortage manifests in rising overtime hours

This drastic increase in overtime work is a dangerous signal for businesses, who risk rising labour costs, increased turnover, and even potential legal liability. Unfortunately, the obvious solution—hiring more workers—presents its own challenges as Australia’s skills shortage begins to noticeably affect businesses. To avoid potentially dangerous consequences, businesses need to focus on retention.

Unemployment is increasing despite rising overtime

Normally, an increase in overtime would suggest that businesses are experiencing a labour shortage. However, Australia’s unemployment rate has actually increased slightly to 5.3 per cent. This is likely because the workers that are available don’t have the skills that employers are looking for. As a result, growing businesses are forced to rely on their existing employees to shoulder growing workloads. This approach is unsustainable, however, and businesses need to plan ahead to avoid potentially serious consequences.

Overtime makes businesses less competitive

When overtime hours increase as much as they have, employees quickly burn out, general morale erodes, and people begin to look for the door. As a result, a business that’s already having difficulty finding the skilled workers it needs will quickly find itself losing the employees that it has. Those departing workers are then most likely to go where conditions are less stressful, namely to competitors who already have enough staff to comfortably distribute workloads.

Not only does that force businesses to boost their hiring and onboarding efforts to compensate, it forces them to rely on the same labour market that forced them to overwork the departed employees in the first place. Many businesses, however, aren’t viewing growing overtime as the threat that it is to their success, because they aren’t paying for it yet.

Employees are increasingly working for free

Paying overtime rates long-term inherently puts businesses at a competitive disadvantage to properly staffed competitors. But, to add insult to injury, a growing number of businesses are avoiding this problem by simply not paying their workers for their additional work. 57 percent of workers who aren’t paid under a modern award reported not being paid for their overtime hours.

From an employer’s perspective, employees putting in overtime might sound like a good thing. After all, an employee who is dedicated enough to work for free sounds great. The reality, however, is much more complicated. The increasingly excessive amount of unpaid overtime expected of Australian workers exposes many businesses to legal liability. While “reasonable” overtime can be requested, the rapidly rising quantity of overtime hours, along with the health and personal impacts this inherently implies for employees strains legality.

Businesses need to protect their interests

While an increase in overtime presents risks, it is certainly not an unavoidable problem for businesses. In order to avoid a situation where increasingly indispensable employees burn out and leave, businesses simply need to prioritise employee retention. That and keeping communication open with employees to recognise and react to signs of overwork, and finding ways to keep workloads controlled.

Control your business’ growth rate

Every business’ growth is limited by the resources it can bring to bear. Most often, that’s an issue of financing. In this case, however, labour resources are most likely to be the limiting factor. A business that can’t find the skilled workers it needs to grow its operational capacities can’t simply rely on existing employees to shoulder excess work until new employees can be found. Instead, labour resources, like growth capital, are best lined up ahead of time. Otherwise, businesses risk normalising overtime when suitable additional workers can’t be found.

Communicate with employees

Employees don’t always tell their bosses when they are being overworked. Some may fear potential reprisal, while others just want to be seen as team players. Regardless, these workers are just as likely to burn out as employees who are more reluctant to work overtime. It’s important to be aware of the amount of work each employee is responsible for, and to recognise when someone is working too much.

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