Wages growth slows to 18-year low

Date
    February 24, 2016
    Sydney Morning Herald

Wage growth has eased to its slowest annual pace since the current index series was launched 18 years ago, with company cost-cutting, low inflation and last year's spike in unemployment keeping a lid on demands for better pay.   

The Australian Bureau of Statistics said on Wednesday that the seasonally-adjusted wage price index rose a mere 0.5 per cent in the December quarter last year to reach an annual rate of 2.2 per cent.

This is the weakest rate of growth since the first full year of the current wage price index in 1998, and came in slightly below economists' expectations.


The latest quarterly growth compares with 0.6 per cent in the three months to the end of September, for a year-on-year rate of 2.3 per cent.

The latest data means wages growth is only just staying ahead of the official consumer price index, with headline inflation last measured at 1.7 per cent and the trimmed mean, or core inflation, at 2.1 per cent.

"Over the last year, private sector wages grew at a slower pace than the public sector: 2 per cent compared to 2.6 per cent, seasonally adjusted," the ABS said.

"In mining, electricity, gas, water and waste services; construction; and administrative and support services, wages grew over the last year at the lowest rate since the commencement of the series," it said.   

By state, wage growth was stronger in New South Wales and Victoria than in Western Australia, which has borne the brunt of the resources downturn.

Wages there grew only 1.8 per cent year-on-year, compared with 2.1 per cent in New South Wales and 2.4 per cent in Victoria.

Growth rates also varied between employment sectors, with employees in financial and insurance services best-off, at 2.7 per cent, and those in administrative and support service the worst, with an annual pay rise of 1.4 per cent. Wage growth in mining came in at 1.5 per cent for the year.

ANZ Bank said on Wednesday the latest data confirmed why unemployment was steady but suggested household spending would remain below Reserve Bank of Australia forecasts.

"Subdued wages growth has been supporting jobs growth overall but household income growth has remained weak," ANZ Bank said.

"We expect modest improvement in wages and household income growth, and hence consumption growth, over the year ahead.

"But we struggle to see annual growth in household spending returning to 3 per cent rates as per the RBA view," the bank said.

Commonwealth Bank of Australia senior economist John Peters said a surge in the jobless rate a year ago dampened employee enthusiasm for better pay.

"In a nutshell, the spike up in unemployment rate to 6.4 per cent  in January 2015 to its highest level in 13 years, and the accompanying lift in spare capacity in the labour market, has toned down workers' pursuit of higher wages," he said.

From Westfield to Caltex: Big pay is back   

Date
    February 24, 2016
    Sydney Morning Herald

It's a question that's surfaced again after a bout of better-than-expected earning results from some of Australia's largest listed companies helped to line the pockets of chief executives from Westfield, Caltex and Amcor.   

On the same day that official statistics showed the nation's wage growth has eased to record lows, Westfield revealed it had forked out a staggering $US32.1 million ($A44.4m) to keep its top three executives fed over the 12 months to December 31, including handsome payments to two of chairman Frank Lowy's sons, Peter and Steven Lowy.   


Ken MacKenzie will take home more than $US22 million after leading Amcor for a decade.

Sydney-based Steven Lowy took home $US9.2 million for the period, while his Los Angles-based older brother Peter Lowy received total cash remuneration for the year of $9m. Steven Lowy's pay was slightly higher due to being paid out some of his annual leave and long service leave entitlements.


The payments all relate to the first full reporting year for the company that was born out of a restructure in June 2014. Over the six months from June 2014 to December 2014 Peter Lowy received $US5.4 million for the period while Steven Lowy was paid $5.2 million -- representing their bonuses for successfully completing the restructure that resulted in Westfield being a mainly offshore operation. 

The brothers' pay, however, was dwarfed by Westfield chief operating officer Michael Gutman's $US13.88 million pay packet which included a $US8.232m 'retention' bonus. Mr Gutman is seen as central to Westfield's post-restructure strategy to grow its highly lucrative development business in the US and Europe.


Julian Segal of Caltex got a huge bonus in part for closing down a refinery.

Rounding out the payments for one of Australia's highest paid working families, Westfield chief financial officer and Frank Lowy's nephew Elliott Rusanow took home $US4.06 million.

Mr Gutman's pay outpaced that of Caltex boss Julian Segal who received total remuneration for 2015 of $13.86 million thanks in part to a payout of Caltex shares. Mr Segal's increased pay packet came as Caltex's profits surged following the closure of the Kurnell oil refinery in Sydney which led to hundreds of jobs being axed.

Gone, but not forgotten, former Amcor chief Ken Mackenzie received a $US22 million final pay packet from the packaging group when he retired in 2015.


Meanwhile Woolworths boss Grant O'Brien is widely expected to receive a $10 million boost to his final remuneration from the retailer when he retires this year.

The apparently generous payments come as corporate Australia showing signs the good times are back this earnings season.

Goldman Sachs analyst Matthew Ross said 46 per cent of the 132 ASX 300 companies to have reported results in the February earnings season have beaten consensus expectations by greater than two per cent, while 28 per cent have missed consensus expectations.

"While this in part likely reflects the subdued expectations heading into results, it is encouraging to note that only twice in the past 15 earnings seasons have more than 40 per cent of firms beaten expectations," Mr Ross said.

"Most encouraging as a signal for the broader economy, 40 per cent of firms have beaten at the revenue line, and only 15 per cent have missed," Mr Ross said.

Martin Lawrence, a governance analyst at proxy advisory house Ownership Matters, said the data shows fixed pay and annual bonuses for CEOs were either steady or slightly decreasing in the years since the global financial crisis.

"The bit that is harder to accurately measure across the market is the real pay. So not the statutory pay but the real value of the pay received. That's really hard to piece together," Mr Lawrence.

Mr Lawrence said an example of this was the vesting of options that were allocated at "a fortuitous time".

"For example if you were a CEO in the GFC and you managed to survive, then any equity you were allocated in the GFC is [now] incredibly valuable because share prices were depressed and they came back," Mr Lawrence said.

One fund manager with shares in Westfield, who declined to be named, said the Lowys were extremely talented and seen as some of the best in the business. "Yet I'm not too sure the company needs two CEOs," the fund manager added.

Westfield shareholder and Melbourne City councillor Stephen Mayne took a shot at the Lowys pay on Twitter over their pay.

"Why should Westfield be paying Steven Lowy a kings ransom so he spend much of his time being chairman of the FFA?" Mr Mayne asked.

Still waiting for Libs mining boom , my 550bucks and some news on the missing budget emergency 

Channeling the LNP spirit....
"Lowest wage growth!  You mean there is still wage growth for the commoners?  We made a mistake.  It should have been negative wage growth!...Argghhh... now the economy is going down the drain"

mariacostel wrote on Feb 24^th, 2016 at 3:49pm:

The black and white fallacy.

mariacostel wrote on Feb 24^th, 2016 at 3:49pm:


A non-lib government when compared to the last 2 lib ones.

HOW UNSURPRISING!

No one can answer the question because to do so would mean having to accept that the governments actions have given us the best outcome.

Longy? Maria?