New employees at Coca-Cola Amatil to earn 38 percent less

Coca-Cola Amatil has this week closed a pay deal that will see wages frozen for current Victorian warehouse employees and new employees will be paid 38 percent less for carrying out the same job. A spokesperson for Coke said the deal will bring wages closer to market rates and restore the business to a sustainable earnings growth.

Coke is not the only Australian employer straining under our high cost economy. Holden workers had agreed on a three year pay freeze in a futile attempt to keep manufacturing in Australia and many public servants also face the prospect three year wage freezes.

Data from the Australian Bureau of Statistics (ABS) show real wage growth started to fall at the start of this year. Wage growth has been lower than inflation for the first two quarters this calender year – the worst in 17 years – as higher paying jobs are lost and existing employees are fearful of negotiating pay rises.

But falling wages should actually be a welcome relief for Australia, helping to increase our global competitiveness and retain much needed jobs. While trade exposed export markets such as manufacturing steal most of the limelight, many administrative, IT and back office jobs are also being lost offshore as larger corporations try to contain wage pressures and retain sustainable business units.

Earlier this year, Boston Consulting Group published its Global Manufacturing Cost-Competitiveness Index ranking the world’s 25 largest good-exporting nations on wages, productivity growth, energy costs, and currency exchange rates. No prices for guessing – Australia ranked last.

Organisation for Economic Co-operation and Development (OECD) data released last year, showed Australia’s relative unit labour costs had surged 54.1 per cent since 2000, while for comparison, unit labour costs fell in Germany, UK, US and Japan by 14.6, 20.4, 25.9 and 46.2 per cent respectively. The report showed Australia had the second fastest labour cost growth in any developed economy.

In March, the Australian Council of Trade Unions’s (ACTU) called for a rise in the minimum wage to offset our unprecedented housing bubble. The Sydney Morning Herald reported the story :

While the minimum wage was equivalent to 14 per cent of the mean house price in 1993, it is now at less than 7.5 per cent.

ACTU secretary Dave Oliver said a 250 per cent increase in average house prices in the past 20 years had made it impossible for those earning minimum wages to buy a home.

“For those on a low wage, home ownership is a now pipedream,” he said. “Someone on a minimum wage of $622 per week has enough to cover their basic costs and that’s about it. These workers tell us it’s impossible to save up a deposit, let alone afford the weekly repayments.”

Mr Oliver said the minimum wage had increased by 91.2 per cent from 1993 to last year, and would have needed to rise by 254.7 per cent – $1154.42 a week or $60,029.84 a year – to keep up with house prices.

But trying to keep wages in pace with an unsustainable housing bubble is a sure fire bet to shut Australia down.

When businesses shut down or move offshore, getting them back is extremely difficult. Even more so when you lose an entire sector such as Automotive.

While it is disappointing not to hear even a peep from our legislators on this serious structural issue plaguing the economy, the good news is automatic stabilises are rapidly kicking in.

In commenting about Coke’s pay deal and falling wages, HSBC chief economist Paul Bloxham told Fairfax, “There is a disconnect between income growth and house price growth and that needs to be watched very closely. If house prices keep running so far ahead of income growth, there is an increasing risk of a very sharp slow down in property,”

A “very sharp slow down in property” will be disruptive in the short term, but will pay dividends with a sustainable, globally competitive economy in the long term.

» Coca-Cola Amatil slashes wages with new employees to work for less – The Sydney Morning Herald, 11th September 2014.


  1. man u would have to be a complete fool to buy realestate in oz..its not an ivestment anymore its called gambling

  2. The question is, will the politicians and bureaucrats (like Stevens) try to keep the bubble inflated at the same time as wages are stagnant or falling (i.e. by low interest rates, negative gearing, foreign investment, high immigration, land banking).

    It is a nasty little place that we’ve arrived at and not by accident.

  3. “For those on a low wage, home ownership is a now pipedream”
    Rob from the poor to give to the rich is mode of the day. This is a system designed to enslave the majority of the population as it progresses.

  4. @Karl. That’s what the ANZ Chairman, David Gonski says. “But the fact is anybody who believes that prices will always go up is a fool”

    Australia won’t be known as the lucky country much longer. It will be known as the stupid country.

  5. to tell u the truth i wont have any sympathy for even the pensioners who will end up losing their life savings…its people like that my friends cant efford to buy a house and why me and my kids have been stuck in rental apartments for 10 years,,and i will be very upset if anyone else feels sorry for them,,just remember this i read somewhere-over 100 000 australian households have 4 properties or more..

  6. The disconnect is not only between income and housing prices, all costs are going up.

    It’s all good to freeze and decrease wages of shop floor employees, but when electricity, water, gas, food, shoes, education etc continues on a never ending surge upwards eventually we, the great unwashed masses are not going to be able to afford to pay for the necessities of Australian life.

    What then, do we accept the construction of tin cities (slums) that surround cities in most of Asia and the majority of the so called third world?

  7. Why investors aren’t running for the exits is testament to the religion of housing in Australia, with such an illiquid asset I would have to wonder when an orderly retreat by some will start.
    Wages in WA are coming under increasing downward pressure as are rents as people leave and we build like crazy into the bust.
    WA will be ground zero and their will be a lot of fingers burnt and I am afraid much worse.

  8. Mark, sounds like you will have to cut back on what you spend. Nothing put more downwards pressure on prices than anaemic demand.

  9. Pete, you can cut a lot of things that you spend money on, but there is no way the fixed components are going to drop in price.
    By fixed I mean land & water rates, daily supply charges for electricity, water & gas, and I am sure I missed something. These are already going up in response to lower sales volumes (land rates aside). Don’t pay and you can loose your house.

    You can buy cheaper meats, cook from scratch and grow your own veg (not flat dwellers) etc, but you can not escape school uniforms, term fees, text books etc.

    For many this is not going to be easy.

  10. 163 years since the Eureka stockade.When OZ was the first country,in the world,to establish the 8 hour working day standard for all workers.Because they were passing out and many dying from working outdoors in the harsh sunshine.How sad,to realise,that we have gone back to those hard times.In many cases 8 hour shifts have been increased to 10 or mainly 12 hour shifts(prime example:nurses,ambulance personel on 14 hours???).But now,we have the total punch in the face,kick in the guts.The halving of wages for semi skilled workers.When we are all experiencing the highest inflationary rise of ALL goods in the history of this nation.Overnight we have the manual REAL workers working below the minimum wage of $22k approx./year.At $90 to $100 per day cash.That’s 10 to 12 kilos of fish or lamb a week.THAT’S IT.Welcome to the banana republic worse than South America.Deflation of wages,at this time,is criminal and against all forms of human decency and fairness.The greed of the elite the 1% exposed for all to see.

  11. Mark – I never said it was going to be easy. Bursting property bubbles are never easy at the best of time. Australia has a perfect storm – a huge bursting property bubble AND a huge busting mining bubble.

  12. I wonder if a worker in Indonesia,on $5 per day, can purchase 400 kilos of meat per year?Probably.Food the levler.

  13. Today’s media spin.Mainstream.OZ ceo’s on $4,000,000 per year.Just one executive taking home the wage of 200 real workers.These parasites probably think that they don’t get paid enough.This is how the lazy suck the blood and life of nation.This is the precise reason why we are at where we are today.

  14. I think a lot of people aren’t seeing the real issue here.

    If, people hadn’t borrowed stupid amounts of money then they wouldn’t be so relient on employment.

    But, the real point that is being missed is the artificial setting of wage rates through collective bargaining and minimum wages. If wages didn’t get so out of hand at CCA due to EBA’s then they wouldn’t need to be pushing wages into reverse for new employees.

    Anyways, this is the new norm, it’s been happening in the USA for years. Speak to a long time GM employee, then speak to a new GM employee next to them: Same job, massively different employment wages and conditions.

    As above, I have little/none sympathy for those who walked into a bank to borrow as much as they can for their house/cars/lifestyle.

    Do some research! Why do people spend day’s researching and going to career expo’s and education seminars, but NO time studying economics, asset cycles, moneytary cycles, credit cycles etc…etc..?

    It’s a well known fact that the rich spend (IIRC) less than 4 hours buying a new vehicle, where as the well-to-do spend days upon days…. The rich focus on what improves their lives (business, investments, etc) where as everyone else want’s the BEST and RIGHT NOW.

    Yes, rates are too low, yes, wages too high, assets too high, but no-one had to join their stupid games……

    Tell me, do you buy petrol from a service station, or do you build your own oil exploration & refinery to supply you petrol? No, because it’s not economic. Why then, do people choose to purchase a home outright even though it’s FAR cheaper to rent ATM?

    Probably because they believe rent is dead money….by that logic, petrol is dead money too! Best be saving for your own refinery

  15. Yes, you can probably now start slowly purchasing your popcorn, as you will soon be watching thousands exiting for the door (it will be become a major form of entertainment by mid-2015), and thousands more going underwater on their mortgages.

    The major banks will however, try their best to hang onto defaulted properties for a little while in order to try and limit the price correction (most homes are around %175 over-valued based on real economic fundamentals). An average Joe Sixpack 400K home in the suburbs should really cost no more than around 135K allowing for a Little bit of watering down of the fiat money through increasing the number of notes in circulation (what we call inflation in professional terms).

    A 600K home today will adjust/correct back down to around 180K maximum based upon real economic and coming economic fundamentals, so now is a good time to think about what you would like to do before it hits really hard and you lose too much.

  16. Matty, I did my research, and left the country.

    I hope I can continue to read about it getting worse, and worse, and worse. It’s all I have to help the meat-pie cravings.

  17. I think its also important to remember for those on lower wages saving for a home, that their rent is significantly higher than it has been in the past. This makes it even more difficult.

    One can only hope that the pain being endured by the lower socioeconomic groups and people wishing to enter into the market will help to catalyize some kind of movement to solve the growing inequity in this awful country.

  18. I love not being in debt, not worrying about losing my job and living life.

    If it all goes pear shaped – living in a tent without power might be fun.

  19. The real issue is that the Australian economy has become a ‘rentier’ economy. Rents for everything have risen across the board – not just residential property but also commercial property which in turn pushes up the costs of products and services. Some sectors (Banking, Telco, Food Retail, etc) of the economy also extract ‘excess rent’ as they are monopolistic or operate within an informal cartel – we pay more for everything as we have a structurally inefficient economy.

    This perverse system is very vulnerable if wages are deliberately depressed and can’t rise in line with increases in living costs. Asset owners and those that derive rents will see rents fall (people get poor and can’t pay) and they will start to de-leverage as they cannot service the interest on the assets they ‘own’. This will be a cascading event and will wipe out two classes of people – all the foolish people that have borrowed millions for property purchases so they can pretend they are millionaires and those that that have used their super to buy into the peak of the housing bubble.

    Mainstream media commentators suggest that all of this can be managed. I suspect some of the brighter ones think we are going to fall into an abyss given the scale of the debt across the economy but would not say this in public.

    I don’t see how it can be ‘unwound’ in a controlled manner given the ‘structural’ issues with the economy. It will be like a slow motion train crash.

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