Profits up 16 per cent in a year, leaving wage gains behind

He says he's had to raise pay by 25 per cent in the last year to attract people to work at his Mr Papa mobile Peruvian street food outlets.

"People are more ready to go somewhere else," the founder of the thriving catering business said. "The big change is the shortage of staff."

Mr Ramirez is far from alone in having to push up wages to attract and retain staff in one of the tightest labour markets on record.

Across the hospitality sector, the wage and salary bill grew by 7.7 per cent in the December quarter, driven by higher pay as well as more staff and hours worked, according to the Australian Bureau of Statistics.

But, as hard pressed as employers are in trying to recruit and hold on to staff, ABS figures indicate they should be able to afford it.

In its latest update on the health of business balance sheets, the official statistician found that gross operating profits surged 10.6 per cent higher in the December quarter to be up 16 per cent from a year earlier.

The jump in profits was broad-based. Of the 17 industries monitored by the ABS, only one - rental and real estate services - recorded a decline and more than half experienced double-digit growth.

Some of the biggest gains were among businesses benefiting from the relaxation of pandemic-related restrictions on travel and socialising.

Businesses involved in live entertainment, the arts, tourism and recreation experienced a 23.8 per cent surge in gross profits while for hotels, restaurants, take-away food outlets and other hospitality providers profits soared 19.8 per cent.

Rising interest rates have delivered a big windfall to the bottom line of banks. Last week Commonwealth Bank announced a record $5.15 billion half-year profit and gross profits across the finance and insurance sector were up 22 per cent in thee December quarter, according to the ABS.

Only a fraction of these gains appear to be flowing through to employees despite the tight jobs market. Overall, labour costs rose just 2.6 per cent, down from 3 per cent the previous quarter.

Advertised salaries grew by 1 per cent in the three months to January and were up a solid 4.4 per cent over 12 months, according to an analysis by online recruitment company SEEK.

But SEEK senior economist Matt Cowgill said the rate of growth had slowed in the past two months as unemployment had edged higher and wage gains were being outstripped by inflation, which reached 7.8 per cent late last year.

"That means real, inflation-adjusted advertised salaries are falling, adding to the cost-of-living squeeze on Australian workers," Mr Cowgill said.

Australian Council of Trade Unions secretary Sally McManus said the results showed that profits, rather than wages, were to blame for the nation's inflation problem.

"What we're seeing is a greed-price spiral as corporate profits surge while wages stagnate. It is these profits off the back of excessive price rises that are pushing up inflation, not wages," Ms McManus said, and called on companies to cut prices and moderate their profit expectations.

Meanwhile, Mr Ramirez said pay increases was only one of many ways he was truing to attract and retain workers.

"It's not just economic reimbursement. It could be an emotional reward," he said.. "It might be organising a dinner with a team - a get-together so people feel that they are all in it together. We show that we value them."

READ MORE:

Mr Ramirez said it was hard to pass pay rises on in prices. He keeps in touch with corporate clients to try to explain why prices may rise. He is juggling the need for staff with the need to keep the orders coming in - the orders which staff also need to keep the wages flowing.

We've made it a whole lot easier for you to have your say. Our new comment platform requires only one log-in to access articles and to join the discussion on The Canberra Times website. Find out how to register so you can enjoy civil, friendly and engaging discussions. See our moderation policy here.