Inflation

[mullokintyre]

Agreed about the various on costs being substantial but how do those things increase by a greater amount than the employee's pay increase?

If an employee is paid 5% more then that doesn't become more than 5% for sick leave, long service, super etc they all go up exactly 5% too.

Not to the employees pay increase, but to the employer.
I admit its been a 12 years sinceI employed people and did the wages, but over about 15 years, we found that for every dollar the employee got in their wages, we forked out 1.30, because of the add ons I mentioned above. And there have been some more addons in those 12 years, super has gone up to 11.0% , parental leave has been introduced as has family violence leave, so i would be surprised if the oncost is now greater than 30% now.
And on top of all that, at least in Victoria, there is payroll tax.
So if employees complain that they only get a 5% increase in wages when a business is increasing its profits, one needs to factor in the real cost of wages to the employee, not the headline costs.
That is not to say that employees should not get pay rises commensurate with inflation, but the pass on costs to employers is significant.
Mick

Edited to correct the SGC rate.

 

[divs4ever]

Depends whose wages.

Grunts might be getting next to nothing and the C-suite all have their salaries doubled so then the company could be making a wage increase claim based on an aggregate.

"Wage costs" in total increased by X amount but who actually got the increases?

and many of those C-suiters have been head-hunted from other companies so you have to pay a premium to get them on board ( or pay extra to keep them on board if they have superior talent and are liable to be poached )

rare nowdays is the C-suiter who started the working career at the company at a very low level ( even junior middle management )

 

[JohnDe]

Many have started only take on jobs that are easily found and fixed. Major tear downs are shunned. I'm noticing this is happening across a few different industries. Business will only fix something that's easily diagnosed with minimal amount of time to fix. If it's difficult they pass it along.

Some jobs are a pain to find and there's a ceiling on how much you can charge.
Some of the older guys are caught in charging too cheap. You just end up run off your feet and just getting by.

That is part of the issue. The biggest problem is that there are too may makes and models, too many options and changes, and too few of the same, and complexity has increased while parts can be hard to source.

In the past there were 3 or 4 major brands, and they kept the major components basically the same for several models. A workshop/mechanic knew how to repair almost with their eyes shut. Whereas for the past 20 years manufacturers will change components with each model change, and sometimes during a model's life.

And then the government opened the import doors. Australia now has more vehicle brands and models than the USA, with a fraction of their population.

On top of that vehicles have become very complex and compact, for emission and fuel standards. The price of some critical parts has become astronomical, and one minor mistake can cause catastrophic damage. Which requires a warranty expense to be added to the repair, just in case.

Try giving a quote when half the engine is made up of plastic parts, the model is not familiar, the supplier can't confirm the exact part number, the fault is unknown without removal of many parts, there is a wait of one to three weeks on the part, but it needs to be removed first for confirmation. meaning that the vehicle is taking up a spot.

These are the reasons that some workshops/mechanics will not, or cannot, take on some jobs. Some mechanics find it less stressful to work in the mines, or become a sales representative, or a barber.

And this is another reason why EVs are going to change the industry. They are less complex and easier to work on than today's ICEV.

 

[sptrawler]

I don't think things are on the mend just yet, there is a lot of upbeat talk about interest rates going down in the near future, my bet is that they haven't peaked yet.
Still way too much money floating around and houses being bought as soon as they hit the market IMO.
Subsidies are fine, until they stop and sooner or later they have to stop.

Albanese calls urgent caucus meeting on cost-of-living fixes

Labor MPs have been called to Canberra almost two weeks before parliament starts as the government works on energy subsidies and other proposals.

www.theage.com.au

 

[divs4ever]

I don't think things are on the mend just yet, there is a lot of upbeat talk about interest rates going down in the near future, my bet is that they haven't peaked yet.
Still way too much money floating around and houses being bought as soon as they hit the market IMO.
Subsidies are fine, until they stop and sooner or later they have to stop.

Albanese calls urgent caucus meeting on cost-of-living fixes

Labor MPs have been called to Canberra almost two weeks before parliament starts as the government works on energy subsidies and other proposals.

www.theage.com.au

from past experience inflation comes in waves as each level of price/cost increases flow through the supply chain

am not so sure about 'peaked ' in real term , but that 'peak ' whenever it is will be tested a few times

 

[Smurf1976]

but over about 15 years, we found that for every dollar the employee got in their wages, we forked out 1.30, because of the add ons I mentioned above.

I follow that part but what I'm not following is why, if the employee's wages go up 10% (round number for simplicity) the cost to the business rises more than 10%?

Why do those on costs, the 30% on top of wages, rise more than 10%?

To my understanding super will cost the employer 10% more and so will everything else. Won't it?

 

[divs4ever]

I follow that part but what I'm not following is why, if the employee's wages go up 10% (round number for simplicity) the cost to the business rises more than 10%?

Why do those on costs, the 30% on top of wages, rise more than 10%?

To my understanding super will cost the employer 10% more and so will everything else. Won't it?

taxes , charges , and other incidental costs ( like insuring your workers have a mind of their own )

so the tendency is they will not simply amplify wage costs in a linear manner ( and this is not allowing for any additional staff needed to handle the administration side of things )

i have worked in companies that had more 'office support staff'/management than actually blue-collar workers '

 

[Smurf1976]

taxes , charges , and other incidental costs ( like insuring your workers have a mind of their own )

Sure no problem.

But why do they increase by an amount greater than the workers' pay?

If the employees all get a 10% pay rise then why do those other costs rise more than 10%?

That's the bit I'm not following. Wouldn't the taxes etc just go up 10% as well?

 

[Value Collector]

I follow that part but what I'm not following is why, if the employee's wages go up 10% (round number for simplicity) the cost to the business rises more than 10%?

Why do those on costs, the 30% on top of wages, rise more than 10%?

To my understanding super will cost the employer 10% more and so will everything else. Won't it?

I Mullo was thinking in terms of absolute dollars, while you are thinking in percentages

 

[divs4ever]

Sure no problem.

But why do they increase by an amount greater than the workers' pay?

If the employees all get a 10% pay rise then why do those other costs rise more than 10%?

That's the bit I'm not following. Wouldn't the taxes etc just go up 10% as well?

dollar-terms obviously but other costs seem to compound also , and god forbid a business needs a short-term loan to cover the bumps on income to cover pay-rolls

a member who runs a medium sized business ( now or in the past ) will give you better details , but those extra costs seem to snowball

of course not every employee ( in some businesses ) get only a 10% pay-rise , some get allowances , or bonuses etc on top of the official wage/salary

 

[over9k]

Sure no problem.

But why do they increase by an amount greater than the workers' pay?

If the employees all get a 10% pay rise then why do those other costs rise more than 10%?

That's the bit I'm not following. Wouldn't the taxes etc just go up 10% as well?

Entitlements.

It's like those employees that every year, without fail, always use every day of their sick leave. Every single one, every single year.

It's not just employers that are c*nts.

 

[Value Collector]

I also think there is two different types of inflation,

1, The standard monetary inflation, People are used to seeing their wages increase to match this over the years.

2, Inflation caused by shortages or supply chain disruption.

when it comes to number 2, it can caused the cost of living to rise, but raise wages to try and over come it does nothing but cause more inflation, because it is caused by a physical problem.

eg, if there is an oil shortage that causes the prices to rise, giving everyone a pay rise doesn‘t magically produce more oil, you have to wait for market forces to correct themselves, and just live with less in the mean time.

 

[divs4ever]

Entitlements.

It's like those employees that every year, without fail, always use every day of their sick leave. Every single one, every single year.

It's not just employers that are c*nts.

sadly i have had some co-workers like that , however that wasn't as bad as it sounds on the work-floor it often meant you were officially short-staffed , not having 'a lower productivity ' day ( and it was liable to be the union delegate if you had one )

 

[divs4ever]

I also think there is two different types of inflation,

1, The standard monetary inflation, People are used to seeing their wages increase to match this over the years.

2, Inflation caused by shortages or supply chain disruption.

when it comes to number 2, it can caused the cost of living to rise, but raise wages to try and over come it does nothing but cause more inflation, because it is caused by a physical problem.

eg, if there is an oil shortage that causes the prices to rise, giving everyone a pay rise doesn‘t magically produce more oil, you have to wait for market forces to correct themselves, and just live with less in the mean time.

often ( but not always ) number 1. creates number 2. demand outweighs predicted supply needs , however there can be ( and have been recently ) supply chain breakages

 

[over9k]

Entitlements.

It's like those employees that every year, without fail, always use every day of their sick leave. Every single one, every single year.

It's not just employers that are c*nts.

I forgot to add all the administrative BS to this too.

 

[Value Collector]

often ( but not always ) number 1. creates number 2. demand outweighs predicted supply needs , however there can be ( and have been recently ) supply chain breakages

The world economy has been so good for so long, that the average person has forgotten that our life style Can still be affected by external events.

There can be major catastrophic events happen and all some people can think about is that prices have risen 7%, and they want their pay packet to rise to compensate instead of just tightening there belt till we get through it.

prices are the ultimate messenger system in capitalism, they are a sign to both consumers and producers to change your actions to compensate for what ever is affecting the supply imbalance.

 

[divs4ever]

There can be major catastrophic events happen and all some people can think about is that prices have risen 7%, and they want their pay packet to rise to compensate instead of just tightening there belt till we get through it.

well mainstream media ( and official government outlets ) create information bubbles , and only the sharpest of pins puncture those bubbles

i would argue about the 'so good for so long ' i have seen the erosion and corrosion over the last four decades , the great Australian brain drain for example , or the unabated perfusion of red tape , but i cannot in all conscience blame one faction or another the major factions have all made their contributions

but what we might now see are the undeniable consequences of all the trends , and why would the workers agree to tighten their belts when the 'fat cats ' delight in getting fatter ( please note most ' fat cats ' are not the business owners ) , seen management grab all the glory and performance bonuses , and engineer further 'belt-tightening ' to earn some more performance bonuses .. and if they do a really good job they are recruited at a nice premium to an even bigger corporation

it isn't only the watermelons that take a light year if you surrender a millimeter

 

[Value Hunter]

Entitlements.

It's like those employees that every year, without fail, always use every day of their sick leave. Every single one, every single year.

It's not just employers that are c*nts.

That is the fault of businesses for being short sighted and for punishing people doing the right thing. If you do not use your sick leave when you eventually leave a company it all dissapears. If company's had a policy to pay out all unused sick leave at the termination of an employees employment with the company far fewer people would use it.

 

[Value Hunter]

The world economy has been so good for so long, that the average person has forgotten that our life style Can still be affected by external events.

There can be major catastrophic events happen and all some people can think about is that prices have risen 7%, and they want their pay packet to rise to compensate instead of just tightening there belt till we get through it.

prices are the ultimate messenger system in capitalism, they are a sign to both consumers and producers to change your actions to compensate for what ever is affecting the supply imbalance.

The good way of resolving inflation is to stop printing money and also to increase supply of goods (cut taxes and regulation so investment and supply can go up) to bring down prices. The bad way (which we are currently doing) is to destroy demand and send the economy into a recession.

 

[Value Hunter]

I also think there is two different types of inflation,

1, The standard monetary inflation, People are used to seeing their wages increase to match this over the years.

2, Inflation caused by shortages or supply chain disruption.

when it comes to number 2, it can caused the cost of living to rise, but raise wages to try and over come it does nothing but cause more inflation, because it is caused by a physical problem.

eg, if there is an oil shortage that causes the prices to rise, giving everyone a pay rise doesn‘t magically produce more oil, you have to wait for market forces to correct themselves, and just live with less in the mean time.

If you are trying to hint at the concept of a wage price spiral its a myth that has long ago been debunked by sensible economists and by empirical data. Its a bogeyman pushed by business interests to give them political cover for keeping wages depressed.