Ron & Edna Johns
11th Feb 2005, 21:42
Too late, John, too late!
Curb your own pay, PM tells bosses
David Uren and Michael Bachelard
The Australian, February 12, 2005
JOHN Howard has admitted he is worried by a wage breakout and has called upon company bosses to show an example to their employees by restraining their own salaries.
With record profits, executive remuneration has been soaring, with average increases in both base and performance pay of almost 30 per cent last year, and further big rises in prospect this year.
The average increase for wage earners over the past year has been 3.5 per cent.
The Prime Minister warned that if senior executives awarded themselves excessive increases, employees would be entitled to ask for the same.
He said the Government would be doing all it could to slow inflation by bringing down a tight budget and introducing industrial relations reforms.
"It's not much good somebody who's helped himself to an excessive increase turning around and tut-tutting at unions, asking for what in their terms, by comparison, is a modest increase," Mr Howard said.
"It's just a warning I want to give because we are starting to, I fear, enter a period where you could have excessive wage claims, and everybody's got to do a bit in relation to this".
In a radio interview, Mr Howard said nobody wanted a return to the days when there was a vicious circle of wage increases leading to higher inflation, higher interest rates and higher unemployment.
"I just worry a little bit that there are some signs, and it is better to say so and to identify some of the problems before they gather traction," he said.
He was not foreshadowing draconian cuts in the budget, but it would be "fairly tight" to ensure it does not exert added pressure on the surplus, which could give impetus to inflation.
Mr Howard's comments come follow a warning from the Reserve Bank that inflation is heading towards 3per cent, with domestic cost pressures mainly to blame, and some anecdotal reports of large wage settlements.
He noted reports of a large wage settlement at Holden and said that although the auto industry was doing very well, it was also receiving a lot of government assistance, implying that he would not like to see that industry leading a wage explosion.
One recent survey of chief executive earnings showed average increases in base and incentive payments last year adding up to 29 per cent, with average remuneration worth $1.7million.
The Business Council of Australia says big business is acutely aware of the need to act with restraint, but that executive pay packets are, to an extent, beyond its control.
"There isn't a board in Australia that isn't sensitive to the issue, given the level of debate and scrutiny over the past few years," spokesman Mark Triffitt said. "But the market for executives operates globally, and to get the best people to run for companies on behalf of shareholders needs packages that are competitive globally."
ACTU secretary Greg Combet said executives should have been showing restraint in their "bloated remuneration" for several years, "but there has not been much evidence of it". Workers had been acting responsibly".
Curb your own pay, PM tells bosses
David Uren and Michael Bachelard
The Australian, February 12, 2005
JOHN Howard has admitted he is worried by a wage breakout and has called upon company bosses to show an example to their employees by restraining their own salaries.
With record profits, executive remuneration has been soaring, with average increases in both base and performance pay of almost 30 per cent last year, and further big rises in prospect this year.
The average increase for wage earners over the past year has been 3.5 per cent.
The Prime Minister warned that if senior executives awarded themselves excessive increases, employees would be entitled to ask for the same.
He said the Government would be doing all it could to slow inflation by bringing down a tight budget and introducing industrial relations reforms.
"It's not much good somebody who's helped himself to an excessive increase turning around and tut-tutting at unions, asking for what in their terms, by comparison, is a modest increase," Mr Howard said.
"It's just a warning I want to give because we are starting to, I fear, enter a period where you could have excessive wage claims, and everybody's got to do a bit in relation to this".
In a radio interview, Mr Howard said nobody wanted a return to the days when there was a vicious circle of wage increases leading to higher inflation, higher interest rates and higher unemployment.
"I just worry a little bit that there are some signs, and it is better to say so and to identify some of the problems before they gather traction," he said.
He was not foreshadowing draconian cuts in the budget, but it would be "fairly tight" to ensure it does not exert added pressure on the surplus, which could give impetus to inflation.
Mr Howard's comments come follow a warning from the Reserve Bank that inflation is heading towards 3per cent, with domestic cost pressures mainly to blame, and some anecdotal reports of large wage settlements.
He noted reports of a large wage settlement at Holden and said that although the auto industry was doing very well, it was also receiving a lot of government assistance, implying that he would not like to see that industry leading a wage explosion.
One recent survey of chief executive earnings showed average increases in base and incentive payments last year adding up to 29 per cent, with average remuneration worth $1.7million.
The Business Council of Australia says big business is acutely aware of the need to act with restraint, but that executive pay packets are, to an extent, beyond its control.
"There isn't a board in Australia that isn't sensitive to the issue, given the level of debate and scrutiny over the past few years," spokesman Mark Triffitt said. "But the market for executives operates globally, and to get the best people to run for companies on behalf of shareholders needs packages that are competitive globally."
ACTU secretary Greg Combet said executives should have been showing restraint in their "bloated remuneration" for several years, "but there has not been much evidence of it". Workers had been acting responsibly".