What's happening with accounting salaries in Australia?
Chris Sheedy takes a look at whether real wages are rising in the ‘lucky country’.
A press release from the Australian Bureau of Statistics, at the end of 2015, said the seasonally adjusted Wage Price Index rose just 2.2% over the calendar year, the lowest on record since the measure was first published in 1998. Amazingly, private sector wages (2% growth) grew at a slower pace than public sector (2.6%).
Experts are predicting that in 2016, thanks mainly to the mining slowdown, wages may actually fall. In fact Bill Mitchell, Professor of Economics at the University of Newcastle in NSW, wrote in February that once volatile factors within the CPI have been removed, it is evident that real wages have actually fallen or been static in six out of the last nine quarters.
This indicates a serious problem for the economy, Mitchell argues. Economic growth relies on growth in spending. But if wages are not growing, spending will stagnate. It is in the interest of business to ensure wages continue to increase.
Where are wages at right now in accounting?
Data crunching analyst site Payscale says Bookkeepers currently average $47,000 to $63,000 in salary, Financial Analysts make $58,000 to $88,000, Senior Accountants make $62,000 to $81,000 and Financial Controllers $81,000 to $134,000.
Research from Hudson in the accounting and finance field shows, unsurprisingly, wages are highest in Sydney and Melbourne.
Financial Accountants with a CA qualification and over four years of experience have a base salary of $70,000 to $140,000, Business Analysts earn $55,000 to $120,000 and Audit Partners and Principals bringing in over $200,000 annually in the major markets.
What about the salaries at the top?
While we are not seeing impressive wage growth below the C-suite, executive compensation is looking very healthy indeed.
A report by Raymond Harbridge, Research Fellow in the Centre for Workplace Leadership at the University of Melbourne, says Commonwealth Bank CEO Ian Narev made $8.32m in the 2015 financial year, or “double the average annual Australian wage every week”.
David Thodey, ex CEO of Telstra, enjoyed a base salary of $2.65m, sweetened by a short-term cash bonus of $3.4m and long-term bonuses, linked to share price, of $7.5m. Ahmed Fahour, CEO of troubled Australia Post, makes $4.6m annually, Harbridge says.
But few are likely to beat Macquarie Group’s chief executive Nicholas Moore, whose remuneration jumped from $16.5m in FY2015 to $18.1m this year, as reported by the Sydney Morning Herald. His base salary was just $819,337 and the rest is shares, employee benefits and profit share.
The average pay, in fact, for those at the helm of major organisations is now more than 50 times the average Australian salary, as reported the 2015 AFR Salaries Survey. Former head of Amcor, Ken Mackenzie, helped boost that figure when he earned almost $21m in his final year.
How are salaries looking in Australia?
It depends who you ask, but current figures show executives taking more than ever out of the business as worker pay stagnates.
It also depends what gender of person you speak to.
The 2015 AFR Salaries Survey said the top 50 highest earners were all males since the retirement of Westpac CEO Gail Kelly, listed last year at number seven.
Are executive pay packets rising, or have they always been this high?
A fascinating study by Mike Pottenger, lecturer in Statistics & Political Economy from the University of Melbourne, revealed a ‘great compression’ of inequality between worker and CEO pay in the US and Australia, beginning after World War II.
Put simply, in 1900 a CEO made 40 to 50 times the average Australian earnings but this fell to six to seven times average earnings in the late 1970s. Now it is back where it was in 1900.
So executive remuneration has risen dramatically or stayed the same, depending on how you cut it.