As business groups increase calls for wage restraint for Australia’s lowest paid workers, their voices turn largely silent when asked about their own executive pay plans.
Guardian Australia asked the Australian Chamber of Commerce and Industry, which has told the Fair Work Commission to limit any minimum pay increase to 2%, if it would adhere to the same wage restraint for its own chief executive.
Views were also sought from ACCI’s state and territory affiliates and a sampling of its association and company members, with more than two dozen industry associations and companies approached for their position on pay rates.
Industry response
Organisations like ACCI are generally not required to publish a detailed remuneration report, with chief executive pay rarely disclosed to the public or to members, but there is nothing stopping them from revealing it if inquiries are made, which has previously happened at some associations.
ACCI declined to comment on the pay rate or increases planned for its chief executive, Andrew McKellar, who is one of the leading business voices calling for minimum wage restraint.
“ACCI won’t be responding,” a spokesperson said.
McKellar has argued that economic and business conditions are fragile and that minimum pay increases not aligned to productivity gains will lead to long lasting and higher inflation. He also notes there have been “exceptional” wage increases over the past two years.
None of ACCI’s state or territory affiliates, which include Business New South Wales and the Victorian Chamber of Commerce and Industry, responded to questions. A handful of its wider membership provided partial insight into their views.
Widening pay gap
The gap between executive and worker pay has been growing for decades. A Productivity Commission report found the average remuneration of top company executives increased from 17 times average earnings in the early 1990s to 42 times by 2009.
Research by the Australian Council of Superannuation Investors shows that the differential between chief executive and worker pay is tracking at about 55 times, with almost all executive pay packets supercharged by bonuses.
For example, the Commonwealth Bank’s chief executive, Matt Comyn, enjoyed a near 50% rise in take-home pay during the last reporting period to $10.4m, as various bonuses kicked in.
CBA, which is a business council member at ACCI, declined to comment on the association’s minimum pay stance and whether the bank should show executive wage restraint.
Another council member, IAG, has kept fixed salary levels steady for key executives since 2021, although the pay packet of the chief executive, Nick Hawkins, increased by 18% to $2.7m in 2023 due to various incentives.
An IAG spokesperson said the insurer conducted an annual review and benchmarking process to determine its fixed pay budget at the end of each financial year.
Industry views
Most industry associations, which are also ACCI members, declined to respond to questions. The non-responders included the Housing Industry Association, whose own submission called for “a conservative approach in this year’s minimum wage review”.
Similarly, the Restaurant and Catering Association did not respond to questions. In its submission it called for an increase of “no more than 2 per cent”.
The Australian Retailers Association, which has lodged a submission to the commission, said the minimum wage should increase by 3.1% from 1 July.
The ARA said all its employees including its chief executive, Paul Zahra, had a standard remuneration review each year that took into account consumer price inflation as well as key performance objectives and a market benchmark for salaries.
“Following this process, the last annual employment increase was within the range of 0 to 5% with the upper end of that range being the exception and only achieved if annual KPIs were strongly exceeded,” a spokesperson said, adding the association did not have staff on the minimum wage.
“For ARA CEO, Paul Zahra, the salary increase for the past financial year was 4% based on performance in the role and the salary benchmarking exercise,” the spokesperson said. “The forecasted annual salary review for the ARA this year is 0 to 3% mainly based on the CPI downward trend.”
A spokesperson for the AiGroup, which called in its submission for minimum wages to rise by not more than 2.8% this year, declined to say how much of an increase its chief executive, Innes Willox, received last year or what he could expect this year. “There were not many pay rises last year,” the spokesperson said.
ACCI membership is broad, capturing major companies, industry groups and even charities.
A spokesperson for the Fred Hollows Foundation said it was a “base member” not individually consulted by ACCI on its minimum pay position.
“The foundation strongly believes in equitable compensation for workers, however, we will not be commenting on this particular matter and welcome the view of industry experts,” the spokesperson said.
Competitive market
The business community tends to argue there is a highly competitive market for talented executives, making a comparison with minimum wage changes redundant.
Those concerned that large minimum pay increases could lead to an inflationary wages breakout also point out there are far more minimum wage earners than chief executives.
On the flipside, minimum pay earners are much more sensitive than executives to inflationary costs, especially for necessities like food, strengthening their argument for inflation-equivalent pay rises.
Companies have also not tended to lead by example when it comes to containing wages during an inflationary period.
Research by the Governance Institute found that executives at some of Australia’s largest listed companies have recorded average pay rises more than double the rate of inflation.
The ACTU is seeking a 5% increase to Australia’s $23.23 an hour minimum wage, based on a 38-hour week for a full-time employee, which it argues is necessary to cope with rising prices and to make up for real wage losses over recent years.
In its submission, the ACTU said the pay rise would have no negative effect on inflation, partly because the wages and hours of minimum wage earners were modest, noting that the 5.75% increase announced last year coincided with falling inflation.
