CUTTING EDGE
SANDY CHONG, CEO, AUSTRALIAN HAIRDRESSING COUNCIL
IFB: What will be the biggest cost challenges for hairdressing business owners over the next few years?
SC: Owners are certainly feeling the stress and pressure around employment costs. We have a real battle in our industry with non-compliant businesses.
This has led to two-thirds of the industry now operating as sole operators or contractors. Some of these are compliant, but most are considered as high risk in contributing to the black economy. This makes it very hard to compete on wages.
The industry as a whole is underproductive. Industry KPIs for wages have gone from 38 per cent in 2010 to 58 per cent in 2019. Many salon wage costs are higher. Education costs are higher than ever before. Since the hairdressing qualification and expectation of the Certificate III is set at minimum basic skills required, then the better businesses spend money on upskilling staff.
Finding productive, skilled, experienced staff is a challenge. The other cost challenge is apprenticeships. Mature-wage apprenticeships are 80 per cent of a qualified wage; this does not guarantee a better apprentice than a 16-year-old. With only 28.1 per cent apprenticeship completion rates across the industry, it means that employing an apprentice nowadays is a major cost to any business.
IFB: The sector is highly fragmented – what will it look like in five years?
SC: From an AHC perspective, we would like to see the industry more regulated. At the moment a qualification to do hairdressing is only required in NSW and South Australia.
Regulation would support consumer safety, give credibility back to the industry qualification, and the government could identify registered and qualified hairdressers. Self-regulation is an option, if supported by the government.
If this does not happen, then the next five years will cement a fragmented industry that becomes predominantly a cottage industry. Small business owners operating with shop fronts will need, more than ever, to compete with impeccable services and quality products that are sold via professionals only, responsive marketing and highly trained staff.
Small businesses that are investing in the future of the industry via apprenticeships should receive government support.