ECONOMICS: by John MorrisseyNews Weekly
Sky's the limit with CEO pay increases
, February 18, 2006
The average Australian CEO now earns more in a week than the average Australian worker earns in a year, according to a new study.Obscene salaries and pay-outs pocketed by the chief executive officers of the 51 member companies of the Business Council of Australia make a mockery of the Federal Government's call for workplace reform and wage restraint.
As these same CEOs trumpet, in the name of international competitiveness, the need for wage restraint to maintain low inflation and interest rates, the irony is not lost on the union movement.Big end of town
"The moral of the story coming from the big end of town seems to be 'do as we say, not as we do'," commented Australian Workers Union national secretary Bill Shorten.
University of Sydney academic John Shields recently illustrated with a barrage of damning figures just how far out of kilter are the size and rate of increase of Australian CEOs' salaries and payouts, when compared with those of the average workers.
His research was published in the Journal of Australian Political Economy
and given national prominence in The Weekend Australian
(January 28-29, 2006).
According to Shields' research, the average weekly salary of $65,800 paid to the average CEO is more than the average worker earns in a year, while the average CEO's pay increase (1989-2005) was 13.5 per cent a year, compared with the average workers' 4.2 per cent.
Shields lists other hefty salary payouts, such as Macquarie Bank's $18.1 million to Alan Moss and BHP's $9.1 million to Paul Anderson.
Predictably, the rationale for these obscene figures is the need to compete on a global market for the best talent to run a company - an argument made familiar by the old maxim, "If you pay peanuts, you get monkeys!"
By this measure, shareholders should be asking why dividends and values have increased only 60 per cent in the past five years, while the CEOs have doubled their remuneration.
And don't suppose that the Australian Tax Office will claw back 47 per cent, the top marginal rate.
The CEO fat cats - who are, incidentally, part of the chorus demanding that this tax rate be reduced - have access to companies, trusts and other techniques to minimise their income tax.
Perhaps tax reform should comprise not only abolition of the tax on superannuation, but imposition of a hefty super-tax on million dollar salaries. It would certainly lessen the hypocrisy of asking the rest of us to "become more competitive".