Australian company directors are super sad about the economy: AICD
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Confidence levels of Australian company directors has fallen to two-year lows as economic, environmental and trust issues wreak havoc.
The Australian Institute of Company Directors (AICD) today released its latest director sentiment index, which has fallen more than 21 points to negative 16.9 points in the past six months.
CEO Angus Armour says directors are becoming increasingly worried about a range of economic, social, policy and regulatory issues.
“Directors have nominated global economic uncertainty as the main economic challenge facing Australian business,” he said.
“Unsurprisingly, this has an impact on the decisions directors are making for their own organisations and they expect investment and new jobs to fall over the coming year.”
The index, which covers an AICD membership of 44,000 across the public, private, government and non-profit sectors, found 91 per cent of directors were taking action to improve the culture of their organisation following the financial services Royal Commission.
Climate change policy rated as the number one concern for directors in the long term and the number two concern in the short term, behind energy policy.
“Directors are likely frustrated by a lack of bi-partisan support for initiatives to address climate change,” Armour said.
“Boards are hearing from investors, regulators and the broader community that they expect closer attention to be paid to this issue.”
A majority of directors also believe unemployment will increase, though data from the Australian Bureau of Statistics released today had the trend unemployment rate steady at 5 per cent for the fifth consecutive month.
Ian Olson, managing director at 3D mapping company Pointerra (ASX:3DP) said unemployment was an issue that needed addressing.
“Unemployment is generally rising as well and new employment requires investment by big and small business, which requires positive sentiment about economic outlook – which I sense is currently depressed,” he told Stockhead.
Andrew Ward, chief executive of SelfWealth (ASX:SWF), said large businesses would bear the brunt of projected economic trends.
“Unfortunately directors of businesses, mostly large cap, bear the brunt of the overall macro trajectory of the economy,” he said.
“Businesses focussed on the customer first, almost without exception all startup businesses, tend to be shielded a little more from these macro factors.
“Larger businesses wishing to change their culture and [to a] customer-centric focus, will need to reinvent themselves and this does not happen overnight.
“It is almost a generational shift required. Many executives working in well paid jobs with significant bonuses, went to university and studied the relevant courses to secure these high paying jobs.
“For corporate Australia to turn around and change the salary/bonus dynamic, it will take some time.”