The corporate sector still appears to be in good shape, while worker compensation growth is well below the cost of living.
Key Point:
- Corporate profits grew the most in five years — 17.8%
- But wages rose only 3.3% in the financial year
- Leading economist says arguments that companies can’t afford to pay more are ‘inconsistent’
In the three months to June, the company’s gross operating profit increased by 7.6% on a seasonally adjusted basis, according to the latest data from the Bureau of Statistics.
Taking into account inventory (stock still on the shelf), the company’s profit increased 8.6% for the quarter and 26.2% for the year.
According to Commsec’s analysis, this is the largest increase in corporate profits in five years.
Rising commodity prices boosted mining profits by 14.3%.
In the quarter, manufacturing profits increased 10%, accommodation and food services profits increased 48.8%, and transportation sector gross profits increased 23.8%.
Construction profits fell by 5.7%.
“As we highlighted in our roundup of the recent earnings reporting season, Australian businesses are in good shape, weathering a storm of challenges including supply chain problems, a tight job market, rising inflation and rising interest rates. ,” said Commsec. Investigative report.
“The 17.8% rise in profits in 2021/22 was the largest annual profit in five years.”
Wages increased by only 3.3%
But workers and employees continue to struggle for decent wage increases.
Wages and salaries rose by 3.3% seasonally, according to ABS.
“The biggest gains in wages and salaries were concentrated in sectors recovering post-COVID.”
The Commonwealth Bank economics team noted that “these were up 12.3% in accommodation and food and beverage services, and 8.1% in arts and recreation.”
“Those two sectors are just 1.8%, 3% above pre-COVID levels.”
The current inflation rate is 6.1%.
“big lift [in wages] It reflects both changes in working hours (including due to additional personnel) and changes in wage rates and bonuses,” the CBA noted.
In other words, while wage rates rose, the rise in wages was also a result of more people working, and those who were working were working more hours.
“Employee numbers increased by 0.9%. [the second quarter] Working hours increased by 4.6%,” said the CBA.
“There is no economic logic here.”
Leonora Lisse, a senior economics lecturer at RMIT University, said the increase in take home wages could have a lot to do with workers returning from COVID-19 isolation who were not eligible for sick leave.
However, she said the latest data revealed a policy, often advertised by companies, that they cannot afford larger wage increases at present, as misleading.
“There are no rigid ties there – there is no economic logic [that higher profits lead to higher wages]said Dr. Risse.
“Wages are determined by supply and demand in the labor market.”
But Dr. Risse said the company’s profit margins are “pretty healthy.”
“It doesn’t match that rationale. [they] We can’t afford to pay our workers any more,” she said.
More data on profits and wages will be released on Wednesday, along with the latest national accounts figures, including gross domestic product for the June quarter.
.
Comments
Post a Comment