Employment costs in WA and Qld catching up to NSW and Victoria

Employers in Australia’s resource-rich states are being hit with higher salaries as the average employment costs (including base salary and all employee benefits) in Western Australia and Queensland are speeding towards the national average, a study from

Employers in Australia’s resource-rich states are being hit with higher salaries as the average employment costs (including base salary and all employee benefits) in Western Australia and Queensland are speeding towards the national average, a study from Mercer has found.

Mercer’s Australia and New Zealand Regional Differentials 2008 report shows that employment costs across the country are moving towards a more even playing field, but this trend could lead to employment costs in the resource states outpacing traditional hotspots of NSW and Victoria.

“Any sustained difference in market pay movement may start to show up as a big difference, particularly with higher paid employees, creating an increasingly complex environment for employers managing a national workforce,” says Rob Knox, leader of Mercer’s information product solutions business in Australia and New Zealand.

The report shows that New South Wales workers remain the country’s highest paid, with employment costs 2.6% above the national general median (NGM). Meanwhile the cost of living _ in particular rental rates – remaining higher in Sydney, the benchmark and most expensive city.

However, Western Australia is closing the gap, with employment costs at 1.8% below the NGM. “Salary differentials paint an interesting picture. There has been a concentration of higher paid employees in Victoria and New South Wales, driven by a greater proportion of management and senior executive roles,” Knox says.

But the booming resources sector has driven rapid wage growth in Queensland, Western Australia and South Australia. Now wage levels in the resource rich states across the broader workforce reflect more closely those of NSW and Victoria.

“The resources boom in Western Australia and Queensland is having a knock-on effect and driving up demand for workers in related industries that service the resource companies such as construction and logistics. This is putting further upward pressure on wages in these states,” Knox says.

The demand for human resources roles, such as compensation and benefits managers, has also increased dramatically across all locations, particularly in organisations that are growing rapidly in response to the need to focus on reward and talent management in this tight labour market.

Knox recommends that employers analyse their current pay practices from a national standpoint, modelling different scenarios for the next two to five years.

State salary differential vs national general median

NSW

WA

QLD

VIC

SA

% from NGM employment cost 2008

2.6

-1.8

-3.1

-1.2

-5.9

Cost of living differential (vs Sydney) %

Sydney

Perth

Mel

Bris

Adel

2008

Base city

-6

-4

-8

-9

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