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Company profits almost double wages growth

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Company profits almost double wages growth

Australian Bureau of Statistics

Latest figures from the ABS show that company profits have surged by almost 8 per cent over the past year, close to double the rate of wages growth.

Less than a week after the Fair Work Commission handed down a 3 per cent rise in the minimum wage, the Australian Bureau of Statistics released new figures showing that seasonally adjusted wages and salaries grew by an even larger 4.4 per cent over the past year, up by 1.1 per cent in the March 2019 quarter alone.

However, those figures were well behind gross operating profits, which came in at 1.7 per cent in the March quarter and 7.8 per cent over the past year.

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That was despite manufacturing sales being deep in the red, plunging by 4.3 per cent in seasonally adjusted terms over the past year, and down by 1.4 per cent last quarter.

Wholesale trade fared better, with sales up by 1 per cent compared with the previous quarter, helping the annual result to reach 0.8 of a percentage point seasonally adjusted.

Rafael Moyano, CEO of recruitment agency Adecco, suggested that the figures mask significant differences in wages growth across different sectors of the economy.

“The ABS Business Indicators Report shows there is a large discrepancy in wage growth between industries, which is a concern for the overall picture,” he said.

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“Industries focused on white-collar labour have seen reasonable wage growth for the most part, with professional, scientific and technical services seeing seasonally adjusted raises of 3.4 per cent — in line with government targets for the wider economy.

“That said, the retail sector saw a seasonally adjusted wage increase of just 0.2 [of a percentage point], and accommodation and food services saw a similarly poor 0.9 [of a percentage point] increase.”

This, Mr Moyano suggested, adds support for the inflation-beating increase to the minimum wage.

“With workers in these industries relying more heavily on the minimum wage, the 3 per cent increase announced by the Fair Work Commission will bring an important boost on 1 July.”

According to the Reserve Bank, inflation is currently sitting at 1.3 per cent.

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