US, Canada labour costs undercut Australia's

TWO of Australia’s major energy and resources sector competitors – the US and Canada – have substantially lower employment costs than Australia, according to a 25-country comparison study.
US, Canada labour costs undercut Australia's US, Canada labour costs undercut Australia's US, Canada labour costs undercut Australia's US, Canada labour costs undercut Australia's US, Canada labour costs undercut Australia's


Lou Caruana

The research, conducted by international accounting and consultancy network UHY Haines Norton, revealed employment costs in social security and other “taxes” for Australian business with employees in the $US75,000 gross wage bracket were around 10% higher than their major developed world competitors.

The data found Australian businesses paid, on average, around 17.5% on top of an employee’s gross wage (the 17.5% includes 9% of compulsory super contributions) compared to 8.24% and 6.99% for the US and Canada respectively.

While Australia sits just below the global average for employment costs in the 25 countries studied, the data highlights wider implications for the energy and resources sector, according to UHY Haines Norton Australia and New Zealand chairman David Tomasi.

“It’s a simple equation – higher wage costs demand higher productivity or an economy starts to lag in competitiveness and we are well aware of the importance of the energy and resource sector to our economy,” Tomasi said.

“As we compete for our share in the resources-hungry Asian market, the energy and resources sectors in the US and Canada have a clear advantage over us in the area of employment costs.

“Like Australia, both countries are high wage economies but the difference is their lower employment costs save their employers money across all wage brackets thus providing them more options to increase productivity by retaining and employ staff.

“It’s accepted Australia has a strong compulsory super system (with another 3% employer contribution to be phased in) that has helped Australia weather global financial events but we implore all state and federal governments to review additional wage on-costs.”

Tomasi said that relieving employers’ wage cost burdens when competing in the energy and resources markets would mitigate one source of external pressure on their business and ultimately help maintain the strength of Australia’s economy.