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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.
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.
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
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