Growing wage differentials are now a feature of the Australasian labour market, as Richard Rudman reports
Melbourne's citizens were shocked when they found out that the city council's chief executive is paid A$30,000 a year more than the premier of their state, Victoria. Welcome to the era of market-driven remuneration.
It's become a familiar refrain in Australia and New Zealand. Organisations claim they need to pay executives their true worth in a global labour market, while shareholders and taxpayers retort that pay is often excessive and out of line with job demands and organisational performance. The Melbourne case is a good example. While Victoria's A$22.2bn revenues and A$13.5bn assets clearly outstrip the city council's A$216m turnover and A$1.96bn assets, few were game to suggest that the premier's salary of A$250,000 might be too low.
Australia's prime minister, John Howard, isn't deaf to these criticisms. He has no intention of "interfering in remuneration levels", but told corporate Australia that "if it looks as though one part of the community is overindulging itself, that will cause resentment".
Scarcely had he sounded that warning when the resentment was fuelled by a report that salaries for chief executives of Australia's 100 top companies had risen by 22% the previous year, to an annual average remuneration of A$1.45m. Over the same period, average earnings for Australian workers had risen by little more than 1% - about half the level of inflation.
It's a similar picture in New Zealand. Anger there was fired up by reports of top newsreaders being paid half a million dollars or more by the state-owned television channel. Incredulity set in when it was revealed that the chief executive of a privatised electricity generating company had been paid NZ$6.5m over two years - compared with annual remuneration of around NZ$425,000 and NZ$335,000 for the heads of two state-owned power generators.
The privatised company's chairman - himself a highly paid chief executive based in Sydney - blustered about the need to reward performance and retain high-calibre executives. That argument was shown to have some strength when the chief executive resigned and returned to a previous employer in Britain, for an even higher income. But that cu