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Real cost of a wage

Discussion in 'Living Room' started by B-Man, 26th Sep, 2015.

  1. B-Man

    B-Man Well-Known Member

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    What is the real cost to actually hire an employee?

    obviously there's their salary, super, long service, sick leave/holidays, leave loading, work cover etc

    is there a base percentage that covers it?
    i have seen some american stats that say 20-30% extra on there salary. anyone have an idea on what australian wages percentage is?
     
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  2. No Probs

    No Probs Well-Known Member

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    Depends on the job role, are they a tradesman who requires a work vehicle loaded with tools? I would say it's probably higher then 20-30%. I remember being told during my business units for my contractors licence that it costs approx $90k to employe someone on $28 p/h ($58k) after you consider everything.
     
  3. bob shovel

    bob shovel Well-Known Member

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    Depends on the company and over heads. Approx 40% I used to work off from memory to do estimates for large construction projects labour
     
  4. B-Man

    B-Man Well-Known Member

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    lets say a tradesman with no vehicle or tools

    i did think australia would be higher than the use so 40% sounds about right. like you said i guess it depends on a lot of factors and if that's probably slightly over quoting it just to be sure
     
  5. No Probs

    No Probs Well-Known Member

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    Workers comp - $??
    Public liability insurance - $?
    48 weeks paid work - $28p/h - $53,760
    4 weeks holiday pay @ $28p/h - $4,480 + loading.
    Long service leave - $??
    10% Superanuation - $5,824
    2 weeks sick leave potentially - $2240
    Mobile phone - $960
    Uniforms - $400

    Total: $67,664 + items I haven't got a figure for.

    I'm sure I've missed some items out but it's already added an extra $10,000 onto their wage without the workers comp, public liability insurance, leave loading and long service leave entitlements and obviously costs get higher with work vehicles included in the package, as then you need to add vehicle insurance, depreciation of vehicle, fuel and other on road costs.

    Hope this helps.
     
  6. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Rent on the real estate they physically take up.
    Hardware, software and tech support (often even if they don't use a computer themselves).
    Marketing budget - their salary is usually paid via some sort of sales, which usually requires marketing.

    The list is endless. For every salary a business pays, it needs to earn somewhere between 2 to 4 times that amount.

    A 30%-40% markup on their salary is what's obvious and immediately visible, but the the actual cost for an employee is significantly higher.
     
  7. JenW

    JenW Well-Known Member

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    In the public sector the rule of thumb is gross wage + 30%.
     
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  8. Tillie

    Tillie Well-Known Member

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    Also I am using a rule of thumb 30% oncosts on the top of gross salary incl. super +perks
     
  9. Bayview

    Bayview Well-Known Member

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    Years ago when I had one of my golf ProShops, I sat down and worked out what the actual dollar cost of my 3 staff was, compared to the total hours worked.

    This also included the wages for Staff needed to fill in for the person who was away on hols; but not for sick leave because it was an unknown cost.

    The numbers are a bit vague now, but I'm pretty sure it was around approx 4.5 Staff - for the 3 Staff I had.
     
  10. Scott No Mates

    Scott No Mates Well-Known Member

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    As others have pointed out, on-costs will vary depending on the role.

    Employer associations will often have guides eg: the Master Builders Association have one which covers building trades and apprentices. Covers travel allowance, redundancy, super, LSL is paid for by the developer, leave loading, sick pay, RDOs, inclement weather, wci/pli etc.

    You then have to add costs of running the fleet, office overhead etc.
     
  11. Bayview

    Bayview Well-Known Member

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    And what makes me laugh is many folks (John Feine on the ABC being one) often talk of the Car industry as being shut down by the Gubb not subsidising the Industry, and also the Car Manufacturers themselves who were too impatient to wait for the dollar to drop to keep them viable....

    And never blames the cost of wages and benefits to employees - compared to other Countries making the same product.
     
  12. Scott No Mates

    Scott No Mates Well-Known Member

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    Totally agreed @Bayview . We get paid too much to be competitive. Lower wages may result in a realignment of property prices (but we'd also need to lock out any foreign investment other than longterm leasehold).
     
  13. Bayview

    Bayview Well-Known Member

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    I'm not suggesting we lower wages etc - we are too far down the track for that given our lifestyle in Aus.

    What I am saying is we all need to wake up as to why there is a huge amount of previous employment in manufacturing etc disappearing from our Country, and accept the truth....

    I keep hearing on the radio/teev etc every day how "we need to create more jobs" and so forth....but the Pollies never spill it out directly - or indeed; ever.

    It's pretty bloody hard to create more jobs when we are now operating in a Global market place, and each successive generation is becoming more and more used to buying stuff made from O/S, and buying it directly from O/S, and the lending for investment and business is tightening.
     
  14. Scott No Mates

    Scott No Mates Well-Known Member

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    The root cause is we, as a nation, are uncompetitive. Land, labour are too expensive and we need to seek to use technology to minimize the use of labour.

    We have a highly skilled/educated workforce which demands high wages even as graduates (eg engineering grads on over $100k when they're incapable of making a decent cuppa on site).

    Manufacturers go to countries where they can make the greatest profit - even if that means lower environmental hurdles, cheaper inputs, better government incentives.
     
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  15. geoffw

    geoffw Moderator Staff Member

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  16. B-Man

    B-Man Well-Known Member

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    i was looking into it more as what is the actual cost of that 1 person. ie there wage and required benefits, ie work cover, super, holidays etc
    as obviously other overheads depend on the business, how many other productive and non productive staff you have etc
     
  17. JDP1

    JDP1 Well-Known Member

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    Not sure about your example of engineering grads on that kinda money, but I do agree with you regarding uncompetiteness. If compared one employee in aust vs the exact same in another country, adding the same value, doing the same job etc.. I'll bet the Australian employee will have a much higher cost than the overseas employee...so....this naturally deters foreign companies from coming here.
     
  18. lightbulbmoment

    lightbulbmoment Well-Known Member

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    Working on a 70 billion dollar construction project and they say our wages are 15 percent of that cost. So paying labour is nothing for these massive global companies.
     
  19. Scott No Mates

    Scott No Mates Well-Known Member

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    @JDP1 - have a read of the attached - section "from Boom to Bust"

    Ref: http://www.smh.com.au/environment/university-of-nsw-students-reveal-a-tale-of-two-career-paths-coal-mining-and-renewable-energy-20151005-gjie5i.html
     
  20. HUGH72

    HUGH72 Well-Known Member

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    I think the silliness might have started to slow down, there are now large numbers of engineering graduates struggling to find work as the number of large new projects has started to decrease.