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Inflation means your wages go down in value. Will they rise to catch up?

At a seaside restaurant in Sydney, Joe Natale is unable to hire staff.

“We had to limit reservations. We had to eliminate takeout. We had to accommodate business according to staffing,” he says.

Natale is weighing whether one of his four venues in the Cronulla area should close.

“The amount people are throwing in at the moment is $100,000. And… it’s ridiculous.”

Restaurateur Joe Natale started feeling the pinch in February. (ABC News: John Gunn)

For a chef with no restaurant experience, “I have no knife skills. I probably spent a month or two in a café” – six-figure wage demands are now the norm.

Natale’s response is to offer high wages with training.

He currently earns a salary of $90,000 a year. But even with a staff of nearly 90, Natale was washing the dishes on Friday night after the kitchen crew left for a new gig that charged him $55 an hour and a penalty.

“I was constantly being asked for more money each week, people coming in, people going out, people being pulled over by other operators,” he says.

The potential for havoc, and wage spirals, is clear. A restaurant without employees cannot open.

“People are desperate, and they’re doing anything just to get the door open.”

wages rise

We can learn more about wages in November when the Australian Bureau of Statistics (ABS) releases new Wage Price Index or WPI data. Other indicators are already rising.

“The wage price index has risen 2.6% over the past year,” said Catherine Birch, senior economist at ANZ Bank.

Catherine Birch
ANZ Senior Economist Catherine Birch said:(ABC News: Simon Tucci)

“But if you look at average hourly wages, they have increased significantly by 5% over the past year.

There are many reasons why average incomes are rising faster than the wage index. People may get promoted or take high-paying jobs in other organizations.

“The proportion of workers in high-paying occupations is also increasing.”

There is an additional complication – wage increases have not been delivered to those who have remained in the same jobs.

quit more

Sad but true. Staying where you are will likely cost you.

People are changing jobs at the highest rate since 2013. The so-called ‘job change’ comes from annual data released in February, but it is overheated by a hot labor market with huge demand for workers.

“Job migration is a big driver of wage growth,” says Birch.

“The vacancy rate is so high at the moment that many companies are competing for workers, making it easier for people to move into higher paying roles and occupations.”

stay still

Not all employers are paying more.

Fast-food chain McDonald’s has launched a massive recruiting campaign of several days of online games and “on-the-spot” interviews of staff to find 14,000 workers nationwide.

However, after being questioned by ABC, a McDonald’s Australia spokeswoman confirmed that it had not raised wages beyond levels set by the Fast Food Industry Awards, a broad corporate agreement.

Faulkner McDonald's restaurant at sunrise.
McDonald’s is looking for thousands of new workers. But he’s not using high wages to attract them.(ABC News: Zarika Rizmal)

“McDonald’s has thousands of jobs across the country, including crew, managers, baristas and maintenance, regardless of age or experience.

“As sole proprietorships, McDonald’s franchisees may choose to offer additional incentives for hiring people, such as sign-on bonuses.”

sweet problem

Manufacturer Andrew Leakey employs 720 staff, primarily in rural Australia, to produce products such as Maltesers chocolate and Extra chewing gum. Factories have field agreements, and wages and conditions are negotiated with employee representatives and unions in a wide range of contracts that span many years.

Andrew Leakey
Andrew Leakey, general manager of candy maker Mars Wrigley Australia, says the answer lies beyond wages.(attached)

“We tend to pay industry prices, which also helps in terms of being a great place to work,” said Leakey, general manager of Mars Wrigley Treats and Snacks in Australia. increase.

It’s more than money, he says.

“It’s about wages. It’s about training and development. It’s about skills. It’s about a sense of community.

“At all our sites, we have multiple generations[of relatives]working there, going back (sometimes) to three or four generations. increase.”

The company doesn’t raise wages beyond what is set in its fixed contracts, but it says it’s just one factor in how potential employees decide where to work.

“It’s a powerful factor. But certainly people are coming into the workforce, younger generations are coming in, wanting culture, wanting progress, wanting opportunity, wanting development, wanting purposeful organizations. “We’re seeing it,” says Leakey.

“So it is equally important to understand what drives the heart of the organization, how it operates in the community and where it operates.”

The company has an internal training program and works with local educational institutions to build skills for future employees, but wants to invest more in training for modern manufacturing jobs. .

“This is not a problem that can be solved tomorrow, and it will not be solved once borders open. It is about long-term development of training skills,” he said.

“If we can move that six months, 12 months, we’ll see a big change. I think it can make a tangible difference to where we are now.”

building growth

In many areas, the challenge of finding and retaining staff is a bigger business issue than inflation, interest rates and global uncertainty.

For Alice Hanna, Talent and Cultural Manager at Melbourne-based builder Kapitol Group, it’s inevitable that the construction industry needs to improve to attract and retain top talent.

“A proficient migration can help in the short term, but there’s a lot more work to be done. It’s not a silver bullet.”

Alice Hannah
Alice Hanna brings workers to Kapitol Group and is concerned about a shortage of “middle” workers.(ABC News: Sean Warren)

Kapitol Group has about 150 staff. Add in subcontractors (workers with specific skills used in contracts) and the number is close to 500 he. And wages soared.

“I think in construction we are probably offering 20-25% more than we did three years ago. has been done,” she says.

At some point, she adds, money just isn’t enough. In addition to healthy wages, we need to create a safe, respectful and welcoming environment.

“We also need to give people really good career development opportunities,” she says. “And they must know that they are wanted, cared for, listened to, respected and loved.”

These conditions help businesses retain their staff and attract the talent they need.

There may also be good news for staff seeking more money to deal with rising inflation.

growth is coming

ANZ’s Catherine Birch is looking forward to seeing what next month’s wage price index data shows. Compared to similar countries, many of which face the same or higher inflation, we are lagging behind.

“So in the US, the comparable measure is 5% (annual), compared to 2.6% in Australia. In New Zealand, (wage growth) is up 3.4%,” she says.

With more jobs than workers, Birch expects the unemployment rate to rise to ‘2’ by early 2023, with competition and new deals at big companies expected to boost wages. .

“By the end of next year, wage growth could approach 3% to 4%.”

That means even workers who stay in the workforce should see their wages rise faster.

crunch point

At Cronulla, Joe Natale is at a loss. His burgeoning wage bill is in addition to other unavoidable costs such as increased material costs and electricity.

He is unable to find staff despite offering greatly increased wages that threaten the viability of the business. The chefs he hires work twice as hard to cover shifts and tasks that others typically do.

“I’m not the only one in this predicament. It’s across the board,” he says.

“Main [meal] A cost of around $30 should realistically be around $55, which is not possible given rising interest rates and competition.

Joe Natale 2
Joe Natale runs four restaurants, but a staffing shortage threatens the viability of his business.(ABC News: John Gunn)

“I don’t like coming to work because I have bad days. I have to deal with labor shortages and rising prices.

“It’s not sustainable. I don’t know how long it will last.”

https://www.abc.net.au/news/2022-10-27/inflations-mean-your-wage-is-worth-less-will-they-rise-to-catch-/101574710 Inflation means your wages go down in value. Will they rise to catch up?

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