Myer CEO Bernie Brookes was in the news yesterday, complaining that it’s too expensive to employ staff because holiday agreements mean that Myer has to pay at least $62 an hour for the privilege. He argues that being internationally competitive would require paying around one-ninth of that figure. Let’s put this in perspective: on a conservative estimate and with no leave loading whatsoever, Brookes gets paid more than 10 times as much per hour as Myer permanent employees earn on a public holiday, and 16 times more than casual staff.
Picture: Lisa Maree Williams/Getty Images
Our sibling publication Business Insider noted yesterday that Brookes had spoken at an Australian Retailer Association event (hardly an unsympathetic audience) about labour costs in Australia. We’ll focus on two of his complaints: that staff on public holidays are spectacularly expensive and that overseas staff are much cheaper and provide the baseline we should compete with.
Firstly, on the subject of casual staff, Brookes had this to say:
When we open on Anzac Day, I think the cheapest person is $62 an hour because of the penalty rates.
How do those numbers come about? According to the current Myer Enterprise agreement, full-time Level 1 staff work 38 hours a week and earn $709 per week. That works out at $18.66 an hour — a long way short of $62.
However, no-one routinely gets paid that rate to work on a public holiday, because full-time staff are given the day off on public holidays. This is why public holidays are public; we all get them.
If a full-time employee agrees to work on a public holiday, they are entitled to a 250 per cent loading under the agreement. I suspect this is the basis for Brookes’ $62 an hour figure, though this actually slightly understates the case (a 250 per cent loading on $18.66 comes in at $65.30). I’m not surprised he doesn’t like it, but that number doesn’t tell the whole story.
If full-timers aren’t available , those roles have to be filled by casuals, and the enterprise agreement (which, let’s remember, Myer agreed to) grants a 150 per cent boost to the hourly rate on public holidays, designed to compensate for the fact that they don’t receive holiday pay or other benefits. A 150 per cent boost to the $18.66 rate works out at $46.65 — not insubstantial at all, but somewhat lower than the number Brookes is complaining about.
The bottom line? It’s definitely costly to open on a public holiday, but it’s not true that $62 an hour is the opening figure for everyone who might happen to be working that day. Equally importantly, it is not a regular cost of business every time your local Myer opens its doors. Most people are being paid way less than that most of the time.
Next, let’s compare that figure Brookes’ own salary. Myer’s most recent annual report discloses that in the 2011-2012 financial year, Brookes made $3.08 million before tax. (By comparison, a Level 1 staffer would make $36,868 in a full year if they work regular hours.)
Let’s be really generous and assume Brookes worked twice as many hours as a normal full-time employee and took no holidays whatsoever. That works out at an effective hourly pay of $779.35 an hour — more than 10 times more than the permanent staff he is complaining about on public holidays, and 16 times as much as the casuals. And that’s the average hourly rate; no penalty rates attached. Brookes makes 40 times as much as the standard Level 1 hourly rate.
You could argue share benefits don’t count. I’d say that’s ridiculous; pumping up the share price is a key task for the CEO, and that’s why some of their compensation is paid that way. But if we made that assumption, looked only at his base salary of $1.74 million, his hourly rate (again assuming a double workload) is still around $429 an hour. If we’re looking for the most expensive employee, this seems like the place to start.
Something else to note: Brookes earned that money and didn’t receive a performance bonus, since Myer didn’t meet targets. So that’s not a reward for doing well; it’s a basic salary for not doing exceptionally.
With that said, let’s look at Brookes’ second complaint: the cheapest rates paid in some roles overseas:
[Retail merchandise is] picked out of a distribution centre in Birmingham at GBP4.30 ($7.12) an hour, and we’re trying to get that same product picked at a distribution centre in Altona at $27 an hour.
First point: according to the UK government, the per-hour national minimum wage is GBP6.31 for anyone over 21, and GBP5.03 for someone 18-20. So I’m really not sure where the GBP4.30 figure is coming from.
Second point: comparing the absolute maximum you can pay someone here with the absolute minimum somewhere else is highly disingenuous. As is comparing pay rates for customer-facing roles for those for someone working in a warehouse. The jobs aren’t the same.
Thirdly: I wouldn’t dispute that people overseas often get paid much less than Australia, and you don’t need to head to third-world economies to make that point. Just last week, we calculated that people employed at McDonald’s in Australia earned about twice as much as McDonald’s workers in the US.
However, that didn’t mean they were overpaid; by our analysis, they still barely had enough to cover living costs. In the US, where the wage was similar to what Brookes was suggesting as a competitive UK wage, someone would have to work two full-time jobs to make ends meet. If Brookes wants to argue that we should force all his staff to work two jobs just to live, that’s his choice, but let’s be very clear what he is actually arguing for.
Brookes also had this to say:
We have seen an enormous uncompetitiveness occur and decreasing productivity in Australia, that I think the next generation should not only be scared about, but they should be frightened to the extent of making more noise to do something about it.
I don’t doubt that competing with overseas stores that don’t pay decent wages is a major challenge if you happen to manage Myer. I strongly doubt that suggesting we slash wages by a factor of ten and render people unable to survive on a basic wage is the answer. I find that much scarier than Brookes’ current corporate predicament.
I’m all for discussing costs, but let’s not do it in a vacuum. In particular, let’s not assume that a man effectively being paid more than $780 an hour is in the ideal position to propose that paying people $7 an hour is reasonable.
Comments
19 responses to “Myer CEO Makes At Least 10 Times More An Hour Than His Staff”
I always love how the people complaining about paying wages for people who work on weekends, public holidays and at night, are people that never have to work on weekends, public holidays and at night. I work every Friday Saturday and Sunday while my Wife works Monday to Friday, so we never get to spend anytime together apart from the odd public holiday, I’m not complaining, we are simply taking advantage of the penalty rates on offer to get ahead on our Mortgage (with 25% already paid off I think we are doing well) but if penalty rates are withdrawn people may have to get used to the fact that a number of stores will begin to close on the weekend and at nights, why will people work odd/unusual/inconvenient hours for no benefit? I know I won’t. And retail is crap work, stroppy customers, not enough staff, not enough stock. And people like Bernie wonder why people are shopping online. Overpaid and out of touch guys like Bernie need to spend some time on the shop floor, serve the customers, put stock out, deal with complaints at store level and they will quickly realize that staff wages are not the problem they think they are.
To them, its just the dollar that matters, not the human factor. People like Richard Branson though who DO consider the human factor excel in business and human relations.
The 2 problems with that comparison is that first you’re talking about 1 CEO on a salary versus the dozens of employees required to run a single Myer store for a day – let alone the hundreds required for all the Myer stores on a public holiday.
The second problem is that Myer is in the business of discretionary retail. If you’re that keen on buying something from Myer and they aren’t open on a public holiday you’re going to make time to buy that item on another weekend or weekday. Nobody goes out of their way to purchase something at Myer on a public holiday and would spend MORE than they would have otherwise.
You could make the argument that as Myer is a full price retailer for the most part (relative to places like Harris Scarfe or online stores etc) they should have the margins to open public holidays. But I’d still wager when they look at trading for public holidays they would be generating a net loss on the day.
I’m quite sure that on public holidays they only use 16 year olds that are paid lower than the $18.66/hr rate stated.
I don’t understand people that compare salaries of CEOs to store staff. It seems like some weird attempt to pull heart strings but there is a reason their salary is different… He is the CEO of a multi million dollar company with thousands of staff. They are retail staff with a fraction of the responsibility. You think you could swap the two? No? That is the reason for the pay gap, leave it at that.
Extraordinarily confused about what the purpose of this article is as well.
At Lifehacker, we like facts. Remarks like these are often reported uncritically and without context. If Brookes wants to argue salaries should be lower, that comment deserves context: both his own salary and whether the actual claimed rates are true.
Factual reporting? You are kidding Angus?
Comparing a CEO package to a store worker, putting his numbers in bold type and pulling at heart strings and knee jerks is not factual reporting.
Just because you are citing facts doesn’t make it useful. You are right, context is great but I don’t see how the context you are providing is relevant.
What purpose does a comparison to his salary serve? If you want context why don’t you compare to other wages/standards by other retailers in Australia like Kmart or David Jones? Then we’d actually be able to tell how these wages compare to people that are doing the same thing, not a job that is wildy different.
A comparison to what is paid in other (similar) industries would certainly be instructive in a different way, I might do that at some point. For me, the main point is actually that the claimed rate staff have to get paid at is questionable — and once we know that, it’s also instructive to ask: well, how much are people being paid elsewhere in the same business? After all, if staff are expected to accept lower wages, shouldn’t that apply across the board? But reducing the pay of someone on $18 an hour will have a much more visible effect than on someone earning 10 times more.
You hit the nail on the head.
I would be surprised if he didnt work more than 70 hours a week. He also has spent more time “unpaid” getting the education to do so. I sure as hell wouldnt sleep at night very well if I went to bed with the thoughts that 1000’s of people rely on me not to stuff up making the business tank and people loose their jobs. Tough Tough job.
Although photo shoots have some perks
What shits me about CEO salaries is, they do a shit job, damage the brand (remember the disability debacle that its money they wont be spent at stores now), yet get paid handsomely for a job that a toddler could probably do better.
So every CEO in the history of ever does a shit job? Really?
I was referring specifically to Bernie Brookes, i thought that was obvious the comment about the disability debacle.
But a large number of CEOs do terrible jobs, how many have we seen screw over the company and get a golden parachute.
To be fair, you’ve seen the minority that get put in the public eye, to be even more fair and play devils advocate, the vast majority of them do work very hard and quite a lot of them dont get those sorts of golden parachutes, only the very creme de la creme of them do. It’s the equivelant of ‘the vocal minority ruin it for the quiet majority’, the asshole corrupt minority CEO’s ruin it for the genuinely hard working ones who spend their lives, quite often having to be available 24/7/365 at a moments notice working harder than anyone realises.
I agree, I don’t get the purpose of this post.
In free markets – the by-far-best way to run an economy and keep more people out of poverty – the competition pushes wages, products/service prices and companies profits down to a minimum.
Any socialist-like, union-like, fair-wage-like comments are plain irrelevant.
Myer needs high quality staff to maintain the value proposition of being a premium retailer, otherwise they will become just another k-mart (no offence I love k-mart!).
People expect a high level of service in Myer. This is the reason why most of their customers go there.
I disagree, the reason most customers go to Myer as opposed to K-Mart, Target, etc. is the fact that Myer sells more premium, desirable brands. In my experience the difference in service between Myer and a cheaper department store has been negligible.
It would be fair to say that the CEO’s salary is similar to the wages of the staff of small Myer store on a weekday (non-penalty rates).
Lowering wages is a much bigger issue than just making it harder for these people to live. If Myer were allowed to lower their employee wages for “competitive advantage” they would actually be shooting themselves in the foot, not to mention the entire consumer industry.
Let me explain why. Economy is maintained by consumer spending in that economy. However, it also needs to hire employees to serve the consumers by producing, supplying, stocking and selling the products that the consumers buy. The tough factor is that the consumers are also the employees.
On the one hand the economy needs the consumers to buy more products to increase the turnover. But at the same time, the only way to encourage the consumers to buy more products is to increase their employee wages, which has to come from the profits. In the big picture the economy wants all of its consumers to spend more and more money, meaning that the employees need increased wages and wealth.
Shareholders are important to productivity because they hold the CEO’s accountable to their positions and priorities of running a successful company. However, when the shareholders and upper management are greedy this is where the problem comes. Shareholders need to understand that for their investment to truly be successful they need the economy to be successful, not just their individual quarterly investment reports. In a sense, one might say that wages are an investment, as the more the company pays its employees in wages, the more money it allows them to spend as consumers. (There are many incentives and ways that can keep employees consuming within the company and in small ways most large corporations such as Woolworths/BigW are doing this. I will not go into this point here as this post is already too long).
I do not have a problem with CEO’s making a lot of money, and even a lot more than their employees. They would not be in those positions without many years of study, hard work and experience to earn those positions. However, I do not believe they should be paid these huge wages at the expense of their employees, because without their employees, no matter how minor the position, they would not have a company. If business is tough to the point that upper management wants to lower wages and/or cut jobs then they also need to be willing to take a pay cut also. And when business is good and employee wages are being increased, then I’m all for the CEO and upper management being paid applicable bonuses.
CEO’s, upper management and shareholders will do well to remember that their success is at the mercy of the economy and the best thing they can do to not only keep the economy strong, but to continue growth is to increase the wealth of all their consumers (their employees).