The Agenda is our must-read summary of issues concerning Boards of Directors and Government.
Jobless Rate is the Lowest in Almost Five Years
Since 1994, following the recession conditions of the early 90’s, there has been progressive growth in the size of the Australian employment market. Data released on 16 November 2017 by the Australian Bureau of Statistics (ABS) reveals that the jobless rate in October has dropped to a five year low.
Australia’s official unemployment rate declined to 5.4 per cent – the lowest since February 2013 – from 5.5 per cent in September.
The Chief Economist for the ABS, Bruce Hockman, said, “full-time employment has now increased by around 289,000 persons since October 2016, and makes up the majority of the 347,000 person net increase in employment over the period”.
Hockman observed that the States with the strongest annual growth in employment were Queensland (4.6 per cent), ACT (3.1 per cent), Tasmania (3.0 per cent) and Victoria (2.8 per cent).
We note, from a variety of commentators, that the decline in the unemployment level and the rise in employment is aligned with improving business investment intentions and higher business confidence.
Commonwealth Bank Enforces Procedures to Avoid “Second Strike” – and Succeeds!
Shareholders will recall their response at the 2016 Commonwealth Bank AGM to the Bank’s Remuneration Report. Unprecedented since the inception of the “two strikes” law in 2011, the Commonwealth Bank received its “first strike” from Shareholders following, in part, an attempt by the Bank to link CEO Ian Narev’s long-term bonus to new perceived “soft targets”.
CBA Board undertook a process of consultation with stakeholders over the ensuing months since last year’s AGM. According to Ms Catherine Livingstone, the current Chairman of CBA, the Board undertook “a comprehensive review of the executive remuneration strategy, governance and framework”.
In the 2017 Notice of AGM, Ms Livingstone stated that the Bank had “sought to provide greater transparency in our remuneration framework, reporting, measures and progress against targets. The changes also support our business strategy and ensure shareholder alignment”.
The CBA’s hard work was rewarded at the 2017 AGM with more than 90 percent of votes supporting the Bank’s most recent remuneration report.
UK Companies are Losing Employee Talent
Research from Willis Towers Watson reveals that UK companies are going against best practice by delivering remuneration programs that don’t differentiate pay sufficiently for top performers.
Willis Tower Watson’s Global Workforce Study found that only 37% of workers in the UK have found that their pay and performance level match up appropriately and only 40% of employees believe that their managers provide fair payment for their performance.
Willis Tower Watson stated that pay will always be a key weapon in the war for talent.
Many UK high-performing employees may turn their sights to opportunities in Europe to secure more competitive base pay and bonuses which recognise their contribution and value.
Businesses Need to Prepare for Industry 4.0 or Lose 3.5 Million Jobs
There is growing fear that 3.5 million Australian jobs will be threatened by the digitisation of the manufacturing sector if businesses do not mobilise to upskill existing workers and train the next generation of workers to be ready for the jobs of the future.
Former Pacific Brands Chief Executive John Pollaers, a member of the Prime Minister’s Industry 4.0 Taskforce, stated that these job losses could occur within the next fifteen years.
In a similar vein, Adrian Turner, CEO of Data61, said that to prepare for Industry 4.0 involved a strong focus on the growth of companies, and that current economic conditions favour “not the first to market, but the first to scale”. Turner cited the example of Myspace, which he described as “a footnote in history” compared with Facebook as an example of success through speed in response to change.
Wages Remain Contained
The seasonally adjusted Wage Price Index (WPI) rose 0.5% in the September quarter and 2% over the year, according to recent statistics released by the Australian Bureau of Statistics.
The seasonally adjusted WPI has recorded quarterly wages growth in the range of 0.4% to 0.6% for the last 13 quarters (from the June quarter 2014).
Higher wages growth in the September quarter was driven by Enterprise Agreement increases introduced at the end of the 2017 Financial Year, together with the flow-on effect of the Fair Work Commission’s Annual Minimum Wage Review.
Seasonally adjusted private sector wages rose by 1.9% and public sector wages by 2.4% through the year to September 2017. Wage increases were variable with the mining sector recording a 1.2% uplift compared to healthcare and social assistance and the arts and recreation services at 2.7%.
On a regional basis, Western Australia recorded the lowest wage growth of 1.3% while Victoria, Queensland and Tasmania each achieved a 2.2% growth. Public sector wage growth outstripped the private sector in all regions other than the Northern Territory and the ACT. In the above context, the WPI over the past 12 months outstripped the Consumer Price Index which stood at 1.8% nationally.