Opposition finance spokesman Jim Chalmers claimed the National Accounts released in September 2018 showed company profits were growing more than five times faster than Australians' wages. But there is more to the story than Dr Chalmers suggests. A commonly quoted measure of wages included in the National Accounts ' average compensation per employee ' increased 1.6 per cent over the year to the June quarter in seasonally adjusted terms. Using the trend measure, average compensation per employee increased 1.7 per cent over the year. A commonly used measure of profits ' gross operating surplus of private non-financial corporations ' grew 9.7 per cent in seasonally adjusted terms (or by 8.8 per cent in trend terms). The figures showed gross operating surplus of private non-financial corporations grew more than five times faster than average compensation per employee over the year to the June quarter. However, the claim requires context. First, profits tends to be more volatile than wages. This is partly because profit is critically influenced by fluctuations in input prices, commodity prices, exchange rates and consumer demand. In the face of such volatility, comparing a single quarter of data has the potential to paint a misleading picture. Second, Dr Chalmers is comparing an economy-wide pool of profits, with a per capita measure of wages. This is not a "like-for-like" comparison. The figures show the total pool of wages grew by a seasonally adjusted 4.8 per cent over the year to the June quarter, partly reflecting rising employment. On this measure, profits grew at roughly twice the rate of wages.
Verdict: More to the story