Pay soars for SMEs in manufacturing, transport and logistics

Since June 2022, workers in the Manufacturing, Transport, and Logistics industry have seen a big increase in their pay.

Over this period, there has been an extraordinary surge in median base rates, median penalty rates, and median allowances, propelling positive changes in the earning potential of workers in this sector.

Specifically, the median base rates experienced a substantial increase of 30.2 per cent, providing employees with a more secure financial foundation. Accompanying this rise was a noteworthy 12.5 per cent boost in median penalty rates, rewarding workers for their additional efforts during irregular or demanding work hours. Furthermore, there was a remarkable 12.4 per cent increase in median allowances, providing workers with additional financial benefits for various job-related expenses.

The transformation in employee earnings is evident across different salary brackets, particularly in the bottom 25th percentile. These workers saw their monthly base rates grow significantly from $5,356 to $6,143, representing an impressive growth of 14.7 per cent from June 2022 to June 2023. For those in the median salary bracket, monthly base rates experienced remarkable growth from $9,958 to $12,969, signifying a substantial 30.3 per cent increase over the same period. Even workers in the top 25th percentile observed a noteworthy rise in their monthly base rates, jumping from $31,691 to $38,537, an impressive growth of 21.6 per cent.

The positive shift in compensation is complemented by additional insights from the Employment Hero SME Index, which sheds light on the work patterns within the Manufacturing, Transport, and Logistics industry. Despite the evident growth in earnings, Australian workers in this sector are now dedicating more time to their jobs, as monthly working hours have increased by 2.3 per cent since April 2023. This suggests that employees are actively contributing to the industry’s success and embracing the newfound opportunities.

However, amidst these positive developments, the average SME size in this industry has slightly decreased by 0.1 per cent month-on-month. While this reduction may not be significant, it highlights the ever-evolving nature of businesses within the sector and warrants attention to ensure sustained growth and stability.

According to Ben Thompson, Co-founder and CEO of Employment Hero, there has been a noticeable increase in employees’ median base rates within the Manufacturing, Transport, and Logistics industry. This growth is significant, especially considering the improved Purchasing Managers’ Index (PMI), which indicates the sector’s resilience and slight growth despite potential downturns.

The analysis provided by the SME Index has uncovered a potential wage-price spiral in the sector, as base rate growth has affected employees across all pay bands. This interplay between wages and prices should be carefully considered, as it may have broader implications for the industry’s stability and growth. The recent National Minimum wage increases, which came into effect in July, add further complexity to the wage landscape.

The June Index’s Pay Component analysis also revealed a substantial 21.5 per cent increase in the base rate of employees working for SMEs in West Australia between June 2022 and June 2023. This growth is largely driven by the Retail, Hospitality, and Tourism industry, with the largest year-on-year base rate increase at 29 per cent. Notably, both 18-24-year-olds and 25-64-year-olds in this state experienced significant base rate growth at 31 per cent and 20 per cent, respectively. Additionally, SMEs in WA with 20-199 employees saw an increase of 17 per cent in median base rates since June 2022.

Mr. Thompson explained that the base rate growth in the Retail, Hospitality, and Tourism industry in WA coincides with the latest economic analysis from the Western Australian Treasury Corporation, which indicates positive growth in retail trade and the state’s sustained economic strength. This aligns with the notable increase in the base rate of employees working for SMEs in WA.

The Employment Hero SME Index is calculated based on the average number of employees per business compared to the average number in January 2019, set to equal 100. In June 2023, the average number of employees among Australian SMEs was 24.9 points higher than in January 2019.

Though average employee growth has marginally decreased (-0.2 per cent) since May 2023, SMEs have experienced employee growth of 6.5 per cent in the past year. Median hourly wages have increased by 7.4 per cent year-on-year, with a month-on-month increase of 0.9 per cent. Currently, the median hourly rate for employees in Australian SMEs stands at $36.16 AUD, which is $0.29 AUD higher than in May 2023.

Median monthly hours worked have increased by 5.8 per cent in the last year, with a month-on-month increase of 8.4 per cent. For June 2023, the median monthly hours worked for employees in Australian SMEs is 148.2 hours. Furthermore, median employee base rates have increased by 9.2 per cent year-on-year.

The Employment Hero SME Index for June includes a detailed study of Pay Components. This analysis looks at the various parts that contribute to an employee’s overall pay, offering more precise information about the factors that influence the widely-reported median hourly rates in the Index.

The Pay Component analysis is based on data from over 8,000 small and medium-sized businesses (SMEs) and their 700,000 employees. It reveals a concerning trend in the Manufacturing, Transport, and Logistics sector, suggesting a possible wage-price spiral taking place.

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