As Aussies wages remain stubbornly stagnant it’s not the same for those sitting at the top of the management chain.
Around one in three executives received a pay rise in the last 12 months with two thirds of ASX300 executives taking home a bonus, a Aon and Governance Institute of Australia Board report revealed.
But the Institute said that despite many CEOs still finding the budget to give themselves a pay boost, they aren’t immune from the period of low wage rises.
“Across the board, we are not seeing many — if any — meaningful salary increases,” Governance Institute of Australia CEO Megan Motto said.
Those executives who did give themselves a pay boost, it was only by 1.4 per cent on average which is down from 2 per cent last year.
“It seems that uncertainty driven by COVID-19 at the beginning of the 2020-2021 financial year led many companies to hold salaries at current levels or defer the timing of the increase,” Aon’s Principal, Rewards Solutions, Dawson Wang added.
“It will be interesting to see the flow-on effect and impact on executive movement as the economy continues to rise above pre-pandemic levels and confidence returns.”
And Motto said that any companies thinking of increasing pay for executives and directors need to be wary of the reputation risk of doing so during times of economic uncertainty.
“When so many in the community face economic uncertainty, people want to see the ‘pain’ spread evenly,” she said.
The Reserve Bank Governor Philip Lowe has repeatedly called on businesses to increase wages to help fill labour shortages but has said there has been a push back.
Lowe said in the June minutes: “Members noted that the strong focus on cost containment by businesses meant that it would take some time for spare capacity to be reduced and the labour market to be tight enough to generate wage increases consistent with achieving the inflation target.”
Speaking at an event last month, Lowe also said businesses’ “laser-like focus on costs” could be hamstringing the broader economic recovery.
“Most businesses feel they are operating in a very competitive marketplace and that they have little ability to raise prices,” Lowe said.
“As a result, there is understandably a laser-like focus on costs: if profits can't be increased by expanding or by raising prices, then it has to be achieved by lowering costs.”