1301.0 - Year Book Australia, 2005  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 21/01/2005   
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Labour costs

The Survey of Major Labour Costs (MLC) obtains information from employing businesses about the main labour costs incurred as a consequence of employing labour. The MLC survey has been conducted on an irregular basis since 1985-86 and was most recently conducted in respect of 2002-03. (footnote 1)

The MLC collects information on the following components of labour costs:

  • employee earnings
  • employer contributions to superannuation
  • payroll tax
  • workers' compensation costs
  • fringe benefits tax.

These costs are measured on a cash accounting basis, net of any reimbursements, subsidies or rebates.

A number of labour costs have not been covered by this survey. These include training, costs associated with employee welfare services, and recruitment. With the exception of training costs, these items are not considered to make a significant contribution to total labour costs. (footnote 2)

Total labour costs

Total labour costs incurred by employers in 2002-03, as defined in the MLC survey, were $354,150m (table 6.59). Total labour costs for the private sector were $270,330m, representing 76% of the labour costs of all employers. Total labour costs for the public sector, which includes public trading and financial enterprises as well as Australian (Commonwealth), state and local government departments and authorities, were $83,821m.


6.59 MAJOR LABOUR COSTS, By sector
Other labour costs
Earnings
Superannuation
Payroll tax
Workers' compensation
Fringe benefits tax
Total
Total labour costs
$m
$m
$m
$m
$m
$m
$m
Private
233,955.8
20,086.4
7,708.3
6,276.3
2,302.7
36,373.7
270,329.6
Public
72,653.5
6,843.7
2,412.4
1,538.6
372.5
11,167.2
83,820.7
Commonwealth
13,450.3
1,163.3
294.4
176.4
118.9
1,753.0
15,203.3
State
53,323.4
5,203.9
2,090.6
1,155.4
214.6
8,664.4
61,987.8
Local
5,879.8
476.6
27.5
206.8
39.0
749.9
6,629.6
All sectors
306,609.3
26,930.1
10,120.7
7,814.9
2675.2
47,540.9
354,150.3
Source: Labour Costs, Australia (6348.0.55.001).

Components of labour costs

Table 6.59 shows the largest component of labour costs was employee earnings ($306,609m), which accounted for 87% of total labour costs. Earnings, as defined in the MLC, includes gross wages and salaries, the value of salary sacrificed (excluding fringe benefits tax), the ungrossed value of fringe benefits provided by employers through arrangements other than salary sacrifice, and severance, termination and redundancy payments.

Superannuation was the next largest labour cost after earnings, with a total value of employer contributions paid on behalf of employees of $26,930m (8% of total labour costs). Payroll tax accounted for $10,121m (3%), Workers' compensation costs $7,815m (3%), and Fringe benefits tax $2,675m (1%).

Labour costs per employee

In 2002-03 total labour costs per employee were $42,578 (table 6.60). Labour costs per employee varied considerably across industries, with the mining industry having the highest labour costs per employee of $96,399, followed by the electricity, gas and water supply industry with $75,361. These high labour costs per employee industries reflect the high level of earnings in these industries.

The service-related industries had the lowest labour costs with the accommodation, cafes and restaurants, and retail trade industries recording labour costs per employee of $23,934 and $25,061 respectively. In part, this reflects the high proportion of persons in these industries who are employed part-time (49% in accommodation, cafes and restaurants, and 47% in retail trade in 2002-03). In contrast, the proportion of part-time employees in mining, and electricity, gas and water supply - the two industries with the highest labour costs per employee - was only 3% and 5% respectively.

Table 6.60 also shows industries that traditionally involve a high degree of manual labour had the highest per employee workers' compensation costs. The mining industry recorded a per employee workers' compensation cost of $3,026, followed by the construction ($1,871) and manufacturing ($1,652) industries. This could reflect the higher premiums as a result of the increased risk of physical injury in these industries.


6.60 MAJOR LABOUR COSTS PER EMPLOYEE, By industry
Other labour costs
Superannuation
Payroll tax
Workers'
compensation
Fringe
benefits tax
Total
Total labour costs per employee
Earnings$
$
$
$
$
$
$
Mining
81,335
6,040
4,297
3,026
1,701
15,064
96,399
Manufacturing
43,510
3,624
1,985
1,652
526
7,787
51,297
Electricity, gas and water supply
64,296
5,669
3,534
1,147
715
11,065
75,361
Construction
37,397
3,237
821
1,871
*191
6,120
43,517
Wholesale trade
41,723
3,774
1,501
881
891
7,047
48,770
Retail trade
21,958
1,801
662
527
113
3,103
25,061
Accommodation, cafes and restaurants
20,844
1,712
561
737
81
3,090
23,934
Transport and storage
43,871
3,740
1,951
1,631
278
7,600
51,471
Communication services
56,611
(a)1,635
2,854
869
698
6,057
62,667
Finance and insurance
52,395
3,626
2,521
373
930
7,451
59,846
Property and business services
37,435
3,545
1,108
594
314
5,561
42,996
Government administration and defence
45,056
4,856
842
889
297
6,884
51,940
Education
38,598
4,028
1,605
589
144
6,365
44,963
Health and community services
35,443
3,210
219
939
85
4,454
39,897
Cultural and recreational services
28,404
2,384
994
505
247
4,131
32,535
Personal and other services
34,154
3,295
1,173
1,182
224
5,873
40,027
All industries
36,855
3,240
1,221
939
323
5,722
42,578
(a) The superannuation costs of the Communication services industry were particularly affected by the use of surplus funds in some defined benefit schemes to offset employer contributions.

Source: Labour Costs, Australia (6348.0.55.001).


Endnotes

1 Estimates for the 2002-03 MLC were published in Labour Costs, Australia (6348.0.55.001). <Back

2 For more information on training costs, refer to Employer Training Expenditure and Practices, Australia (6362.0). <Back