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One of these things is not like the other


Union calls for exec pay caps

By Ashley Hall

Posted Wed Nov 17, 2010 10:28am AEDT

Sydney CBD skyline

The ACTU says CEOs are earning 100 times more than the average worker. (ABC News: Billy Cooper)

The union movement wants to see new regulations to curb the growth of executive salaries.

The Australian Council of Trade Unions (ACTU) has analysed pay deals at the nation’s 50 largest companies, and found the typical chief executive is taking home a salary about 100 times that of the average worker.

It says the gap between the salaries of bosses and workers is growing at an alarming rate, in what it describes as a picture of greed and inequality.

“CEOs in Australia are earning about 100 times the salaries of the average worker and the gap is widening between what CEOs [earn] and what they pay their employees,” said the president of the ACTU, Ged Kearney.

She says, in the past year, executive pay rose by an average of more than $940,000, or 17 per cent, while the average full time worker received an extra $3,200, an increase of just 5 per cent.

“This is a time when profits are soaring. We have [an increase in] profits in the private sector over the last 12 months of about 27.5 per cent and wages rose about 2.7 per cent in that time,” she said.

“We’re concerned that this shows an absolute hypocrisy of big business who are constantly pushing for industrial relations deregulation, cut pay, cut conditions and the rights of employees. It’s totally unnecessary.”

Ged Kearney says it is time for the Federal Government to impose stricter controls on executive pay.

“There certainly can be a lot we can do in this area. We can actually for a start remove the tax breaks that allow companies to avoid paying tax on salaries over $1 million for example. We could actually link CEOs’ pays to what they pay their staff, let’s say a cap, say a CEO’s salary can’t be more than 10 times than what their employees earn,” she proposed.

“You know we don’t mind people earning lots of money but it is absolute hypocritical behaviour of them not to also share that wealth of that company, share those profits with the workers and with the employees that are helping keep that company profitable in the first place.”

The ACTU’s executive pay figures are quite a bit higher than those gathered by the consulting firm, the Hay Group, where Trevor Warden is a specialist in executive remuneration.

“The data that we’ve seen most recently shows that for CEOs, fixed pay in the year to August had gone up 5 per cent and other executives, is at about 4.9 per cent,” he said.

He argues that executive pay did not fare so well during the global financial crisis, and it is still playing catch up.

“It is still very much a market driven thing, salaries and wages. If we look globally, it is something that occurs globally, and executives are more and more in a global market,” he explained.

Trevor Warden warns against imposing more regulation on executive pay. He says there are often unintended consequences, with companies switching the way they reward executives, rather than the amount they pay.



Rising wages ‘outpace growth’

  • Ewin Hannan and David Uren
  • From:The Australian
  • November 18, 2010 12:00AM
Cost of labour up

Source: The Australian

EMPLOYERS have warned that rising wage settlements are “out of kilter” with inflation and productivity growth.

The warning comes as new figures show wages are increasing at their quickest rate in two years.

The wages push, which is being led by the private sector, will cement the Reserve Bank’s belief that interest rates need to rise further to keep inflation in check.

Employers said there was increasing evidence that unions were pursuing claims that were not accompanied by adequate productivity trade-offs.

Business groups highlighted the potential for the $43 billion National Broadband Network to “exacerbate skill shortages and drive up wages”.

The Gillard government insisted yesterday that wages growth was “contained” while unions accused business of making false claims about a wages breakout.

Related Coverage

The official labour price index, which tracks wage movements, showed a 1.2 per cent jump in the September quarter for private sector wages, having averaged only 0.7 per cent for the previous 18 months.

RBS senior economist Felicity Emmett said the tightening labour market would lead to wages growth continuing to strengthen over the next year or so.

After the now defunct Fair Pay Commission imposed a pay freeze on minimum wages last year, Fair Work Australia this year awarded a $26-a-week increase in the minimum wage, a 4.8 per cent jump that started to flow through to pay packets in July.

“The catch-up for minimum-wage earners could well spread as other workers demand pay gains after the extraordinary wage restraint seen last year,” Ms Emmett said.

The annual rate of private-sector wage growth fell as low as 2.6 per cent following the financial crisis but has now returned to 3.5 per cent. That is the long-term average and would not cause concern if that were as high as it went.

However, claims from unions, such as the 16 per cent rise over three years being pursued by the Transport Workers Union, raise the prospect that the acceleration in wage growth has a lot further to go. A new report on enterprise bargaining shows the tempo was already picking up in the three months to June. The Workplace Relations Department report shows the annual rise in new private sector enterprise deals for the June quarter averaged 4.1 per cent, up from 3.8 per cent in the March quarter. This was the fastest pace since early last year.

Australian Chamber of Commerce and Industry chief executive Peter Anderson said the new data showed wages pressures in the economy that was “out of kilter with both the inflation rate and our productivity performance”.

“The figures show wages are rising faster than prices and almost three or four times faster than productivity growth, and that is a cocktail which will spell reduced living standards in the medium term if we don’t lift our national productivity performance,” Mr Anderson said.

“Unions are starting to push the margins of wage claims. The critical issue is not the making of wage claims but the failure to settle wage claims with productivity trade-offs.”

The National Electrical and Communications Association said a union push for above-inflation annual pay rises of 5 per cent for workers engaged on the NBN was premature.

The Communications Electrical, and Plumbing Union is finalising a claim that it says factors in cost-of-living increases and productivity benefits to be delivered by employees. NECA chief executive James Tinslay said the association was not aware of practices that would lead to NBN workforce productivity increases.

“Until the Australian government releases the business plan for the NBN, it is too early to determine if these exist and therefore any calls for wages increases are premature,” Mr Tinslay said.

“The public-funded NBN project is so massive that it shouldn’t be used as a tool by the unions to gain wage increases where they are not underwritten by productivity improvements.”

Australian Industry Group chief executive Heather Ridout said that, although annual 3.5 per cent wage growth might sound moderate, “in the context of extremely low productivity growth, it is more of a concern”.

She said there was a potential for the NBN project to “exacerbate skill shortages and drive up wages”, while construction industry employers were due to face fresh union claims as many “pattern agreements” expired between now and the middle of next year.

Unions said the data showed that collective agreements were delivering wage increases slightly above inflation, with a higher premium for workers covered by a union agreement.

ACTU president Ged Kearney said that, although wages were rising steadily, there was no evidence to support employer claims of a wages breakout.

An ACTU analysis of the pay packages of the chief executives of the 50 largest listed companies found the average total remuneration was $6.4 million this year, almost 100 times average worker earnings.

“It is blatant hypocrisy for business executives and employer groups to push for industrial relations deregulation and make false claims about a wages breakout when they are lining their own pockets in such a fashion,” Ms Kearney said.

Workplace Relations Minister Chris Evans said the data was encouraging, confirming a trend of contained wages growth”.



MPs set for new year payrise but bosses scotch rises for the rest of us

  • By Debra Killalea
  • November 18, 2010 12:21am
  • Federal MPs in line for New Year payrise
  • Increases of at least $35,000 on the cards
  • But business scotch rises for the rest of us
  • Join us over on FacebookTwitter

FEDERAL MPs paypackets are in line for a new year boost of thousands of dollars.

But while even rookie politicians will enjoy payrises of up to $35,000, up from $135,000, business groups yesterday scotched ordinary workers chances of getting a payrise anytime soon.

The claims by employers that payrises in Australia are out of kilter with inflation come as theThe Daily Telegraph revealed that shadow ministers’ salaries will soar to $200,000.

Backbenchers salaries are set to rise from $135,000 to $180,000 and even Prime Minister Julia Gillard, who earns $350,000, and cabinet ministers wages are expected to jump.

The increases, which form part of an overhaul to parliamentary entitlements, will also deliver a superannuation bonanza to politicians and senators’ retirement nest eggs.

And while the changes are good news for our national leaders, those of us hoping for a festive bonus will be in for a shock as employers warn wages are already increasing at their quickest rate in two years. 

According to the official labour price index, private sector wages jumped by 1.2 per cent in the September quarter, which had averaged around 0.7 per cent for the past 18 months.

The index is used to track wage movements.

Bosses are using the increase to claim that unions are pursing rises that were not off-set by adequate productivity trade-offs.

However, the Government insists that wage growth is contained, while unions accuse employers of exaggerating claims of a wage breakout.

The annual rise in new private sector enterprise deals for the June quarter also averaged 4.1 per cent, up from 3.8 per cent in the March quarter according to the Workplace Relations Department report on enterprise bargaining.

Australian Chamber of Commerce and Industry chief executive Peter Anderson told The Australianthe data showed wages pressure in the economy was “out of kilter with both the inflation rate and our productivity performance”.

He said the figures showed wages were rising faster than prices and almost three or four times more than productivity growth, which would result in reduced living standards in the medium term unless productivity rose.

However, ACTU president Ged Kearny said wages were rising steadily and there was no evidence to support claims of a wages breakout.

Meanwhile, MPs who will receive pay increases are expected to lose a raft of perks, which can add up to $60,000 a year, in exchange for payrises.

These may include the Gold Pass, which allows lifetime travel for retired MPs and tightened travel entitlements.

The changes will be made in a final submission to cabinet within weeks, with Special Minister for State Gary Gray expected to make a formal announcement around Christmas.

This is EXACTLY the same story. They are using the SAME data. What one group yesterday used to defend their CEO pay rises are now using the same data to warn that workers wages should not go up. While yesterday we had the economy and good performance of business that resulted in the reason why CEOs got a 17% average rise, today we are being warned that the same thing is going to be trouble if a worker (who helped make the CEO’s companies have a good performance) should not receive a wage rise as this will outpace ‘growth’.

Meanwhile, our elected officials will get an average greater then the CEOs. Whereas the pensioners get a rise matched by the CPI (about 2.8%) and prices rise for some things like health by about 5.2%.

This is ridiculous. No matter what side of politics you vote for. Time to get mad. Mad as hell.

A. Ghebranious         2010          All Rights Reserved


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