I have always found it irritating when interest groups like the Business Council of Australia complain about Australia’s uncompetitive wages and the need to cut penalty rates or the minimum wage, as well as slash company taxes, but conveniently refuse to address the egregious blow-out in CEO and senior management pay.
Today, The Australia Institute (TAI) reports that average CEO pay packets in the top 100 companies has surpassed $5 million, at the same time as ordinary Australian workers’ real inflation-adjusted pay is going backwards:
The CEOs of the NAB and CBA earned, respectively, 108 and 93 times average weekly earnings (AWE) in 2017. While a retreat from peak levels (267 times AWE for NAB in 2004 and 317 times AWE for CBA in 2010) this is still a large rise compared to the 58 and 70 times AWE they earned in 2000.
Another way of considering this is that while average earnings have less than doubled since 2000, NAB and CBA CEO pay has more than tripled.
Average CEO pay for the largest 100 Australian companies declined from $5.5 million pre GFC to $4.7 million in 2011, but has since increased steadily back to $5.2 million. Similarly, Australia’s highest reported CEO salary peaked pre GFC at $33.5 million, declined to $11.8 million in 2011 before bouncing back to $21.6 million in 2017.
Does anyone seriously believe that the Australian economy is more innovative and dynamic now than before the 1990s when so-called “performance-based pay” spread?
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Arguments around the need to boost Australia’s productivity and international competitiveness via wage restraint and tax reform would carry far more weight if the elites led from the front and agreed to share the burden of adjustment.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
