Salary Movements

This section looks at changes in the salary packages earned by Professional Engineers using the responsibility level framework. Salary packages are the total cost of employment and comprise all cash payments; employer and salary sacrifice superannuation, car allowances, other allowances for overtime, entertainment and parking, bonus payments and payments relating to fringe benefit taxes.

Private sector salary packages are shown in Table 12.6 and Table 12.7 provides the corresponding statistics for the public sector. Salary packages show that engineers are comparatively well remunerated but how packages respond to demand conditions are more readily analysed by looking at annual

changes in engineering packages compared to annual changes in a community benchmark. For this purpose, the benchmark used was full time adult earnings in the private and public sectors.

Table 12.5: The Average Age of Professional Engineers Year Private Sector Public Sector Two Combined

2000 37.0 42.5 38.7 2001 36.8 44.1 39.5 2002 37.9 43.5 40.0 2003 37.2 43.4 40.0 2004 37.7 43.3 40.2 2005 39.5 46.5 42.6 2006 38.3 43.7 40.6 2007 38.9 44.4 41.1 2008 39.9 45.7 42.2 2009 38.9 45.1 41.3 2010 40.2 45.3 42.4 2011 42.4 45.4 43.5 2012 39.8 44.4 41.8 2013 44.8 45.6 45.1 2014 38.6 44.6 41.1

Table 12.6: Average Salary Packages for Professional Engineers in the Private Sector

Year Level 1 Level 2 Level 3 Level 4 Level 5 Above L5

2000 46727 59298 74038 91570 114319 151172 2001 51503 60484 75707 97547 115901 173646 2002 51534 62935 78352 102313 121370 176865 2003 53509 66281 83208 107247 122893 178171 2004 53936 66394 81786 107979 127554 179064 2005 54763 69543 86581 109400 137046 185121 2006 55850 72397 95426 119017 145256 219218 2007 61736 77232 102611 129683 166637 226726 2008 68046 86482 109068 143221 183012 265784 2009 74615 93761 116413 148414 184786 321306 2010 72114 88708 118613 157170 202791 281176 2011 72181 96113 127710 157641 217460 306212 2012 76924 98703 123085 178159 239322 358569 2013 79203 105029 133830 182141 262167 402030 2014 73842 102658 128687 165448 240300 268726

In 2000, private sector packages ranged from $46,727 for level 1 to $151,172 for above level 5; the latter was 3.24 times level 1 packages. Public sector level 1 packages were higher, an average $50,230, but packages for above level 5 engineers were less, an average $148,651, a multiple of 2.96 of level 1. In 2014, the range of private sector salary packages had increased to $73,842 for level 1 to $268,726 for above level 5. The multiple between these levels increased to 3.64. The range of public sector salaries increased from $80,080 for level 1 to $216,491 for above level 5. However, in the public sector, the multiple between these levels fell to 2.64.

With the exception of some junior salaries, packages in the private sector were typically higher than in the public sector:

• At level 1, public sector packages exceeded those in the private sector with the exception of 2009.

• At level 2, public sector packages exceeded those in the private sector until 2008. The relationship fluctuated somewhat before and after the GFC but in recent years private sector packages have been higher.

• At level 3, private sector packages have been consistently higher than those of the public sector. • This was also the case at level 4 with the gap between the two sectors increasing over time until

2014 when the gap narrowed sharply.

• The level 4 pattern was repeated at level 5 with a larger gap between the two sectors. Private sector salaries fell sharply in 2014 but remain well above the public sector.

• Above level 5, the pattern was similar to level 5 with a larger gap between the sectors and a much larger correction in 2014.

Trends in engineering salaries were analysed in two ways; first by comparing public and private sector trends to movements in full time adult earnings and secondly by examining salary growth over time. Trends in salaries over time are illustrated in Figure 12.7. Average annual growth rates in salary

packages were calculated for each responsibility level in each sector. In turn these were average for the following five year periods:

• 2001 to 2005; the early stages of the resources boom

• 2006 to 2009; the period of highest demand for engineers resulting from the coincidence of the resources boom and a boom in infrastructure development

• 2010 to 2014; the period since the GFC encompassing the end of the resources sector construction boom.

Table 12.7: Average Salary Packages for Professional Engineers in the Public Sector

Year Level 1 Level 2 Level 3 Level 4 Level 5 Above L5

2000 50230 62182 71848 85199 104208 148651 2001 51500 64185 75136 91214 105775 144528 2002 52535 66000 77553 92294 110291 146496 2003 55867 71584 78897 99441 117142 155044 2004 55853 71667 80280 98741 117334 154869 2005 57820 73646 84120 102492 120100 157076 2006 60838 76746 90417 108515 127128 172120 2007 64268 81636 94620 115037 140040 180690 2008 70416 85591 103576 122129 150933 193891 2009 73787 91329 108774 126203 151117 194155 2010 75239 97387 113060 132650 165396 196666 2011 77675 96017 118917 139313 167427 238914 2012 76806 94404 117382 143789 175620 234282 2013 84722 103559 122694 150719 182492 233101 2014 82080 102045 124098 151959 200678 216491

These changes are summarised in Table 12.8 which compares them to the corresponding movements in full time adult weekly earnings26 in each sector used as a benchmark for changes in community

remuneration. Changes in graduate starting salaries were also estimated and included in the Table.

Salary Movements 2001 to 2005

In the private sector, average salary increases during this period increased with responsibility level but were generally lower than average movements in private sector adult full time earnings. Salary

movements for new graduate engineers were higher than all but the most senior responsibility level but were also lower than changes in adult full time earnings.

In the public sector, salary movements for levels 2, 3, 5 and 5 were well above movements in public sector full time adult earnings and changes in the most senior responsibility level equalled them. However, salary movements for level 1 and new graduate engineers were well below movements in public sector adult full time earnings.

Salary Movements 2006 to 2009

In the private sector, salary movements for engineers at all levels, including new graduates, were near or over double movements in private sector full time adult earnings. This was the period when the demand for engineers was at its highest and excess demand, or skill shortages, were relieved through large salary movements.

26

These statistics were obtained from ABS, Cat No 6302.0

Table 12 .8: Average Growth in Professional Engineer Salary Packages

Period Level 1 Level 2 Level 3 Level 4 Level 5 Above L5 Graduate Average Adult

Private Sector Full Time Earnings

2001 to 2005 3.3 3.3 3.2 3.6 3.7 4.3 4.0 5.4 2006 to 2009 8.1 7.8 7.7 8.0 7.9 15.0 7.4 4.2 2010 to 2014 -0.1 2.0 2.2 2.5 5.6 -1.5 1.6 4.2 2014 -6.8 -2.3 -3.8 -9.2 -8.3 -33.2 2.9 2.0 Public Sector 2001 to 2005 2.9 5.8 6.1 5.3 6.7 4.7 4.0 4.7 2006 to 2009 6.3 2.2 2.8 4.4 3.3 6.3 7.4 3.9 2010 to 2014 2.3 2.4 2.7 3.8 5.9 2.6 1.6 4.3 2014 -3.1 -1.5 1.1 0.8 10.0 -7.1 2.9 3.1 90.0 110.0 130.0 150.0 170.0 190.0 210.0 230.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 In d ex ( 2 0 00 = 1 00 )

Figure 12.7: Trends in Engineering Salaries Compared to Full Time Adult Earnings

In the public sector, full time adult earnings increased by an average 3.9% per year during this period. Salary movements for engineers level 2, 3 and 5 were well below this, but salary movements for engineers above level 5, level 1 and new graduates were larger but well below the changes in the private sector. In general, public sector salaries lagged reducing their competitiveness with the private sector.

Salary Movements 2010 to 2014

Changes in private sector full time earnings in this period equalled those in the preceding one. However, only salary movements for engineers level 5 exceeded the community standard. Salary movements for all other levels, including for new graduates were about half the changes in adult full time earnings and salaries for engineers level 1 and above level 5 actually fell.

In 2014, private sector change in adult full time earnings was the lowest in the fifteen year period examined. Only new graduate salaries grew faster than this standard. All other levels of engineers experienced salary reductions. This result confirms the evidence of vacancies surveys that the demand for engineers has collapsed.

There was a more inconsistent picture in the public sector. The changes in full time adult earnings were slightly higher than in the private sector, 4.3% per year compared to 4.2%, but all levels of engineers except level 5 experienced small increases well below this level. There was a comparatively large increase for level 5 engineers.

In 2014, growth in public sector full time adult earnings slowed to 3.1%. Engineer levels 3 and 4 recorded salary increases at about one third this level and engineer levels 1, 2 and above 5 recorded salary reductions. There was a large increase for engineer level 5. Graduate salaries increased slightly less than full time adult earnings.

In summary, the salary movements for engineers outlined in Table 12.8 are consistent with expectations given prevailing labour market conditions the periods analysed. Although there were some unusual changes in the public sector during the year ending 30 June 2014, the evidence confirms the collapse in demand for engineers observed in other statistics.

Chapter 13 Change Indicators for the Engineering Labour