While the sector’s earnings have increased sixfold, poor bargaining power has left its employees among the lowest paid in Australia and most vulnerable to inflation
Retail worker salaries are failing to keep pace with the rising cost of everything and lag increases secured by those in other sectors, despite a period of elevated company profits.
Gross operating profits in the retail sector have increased by more than six times since 2001, while retail wages have risen by less than half as much, according to ABS data.
While not all retail companies have recorded steadily rising profits in a sector that has been heavily disrupted by the digital age, some have done very well – and this hasn’t necessarily been shared.
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John Buchanan, a professor at the University of Sydney business school, says that retail and hospitality work is often a port of entry into the labour market.
“I get a little disappointed that people’s first experience of the labour market is not necessarily a rewarding one,” Buchanan says.
“A young teacher or a young nurse, when they enter a school or a ward, they’ll usually be surrounded by people who have traditions of organising and traditions of standing up to employers and not just taking what they are served up.”
He says there tend to be more people seeking entry-level retail jobs than vacancies, which is why the rates are kept down.
You can see this in the chart below, which shows the base pay for workers on the lowest classification in supermarket enterprise agreements over the past decade. Some agreements explicitly tie base pay increases to increases in the minimum or industry award wages.
Buchanan says while union organising in sectors with excess workers is difficult, it needs to happen, otherwise retail workers “will always be at the mercy of employers because of deep-seated inequalities of bargaining power”.
Some retailers also pay “junior rates” for adults aged up to 21, although the practice varies between employers.
Coles and Woolworths have leapfrogged overseas peers to now rank among the most profitable supermarkets in the world, while the Wesfarmers-owned Kmart has recorded fast-rising revenue to become one of the nation’s dominant discount retailers, even as its stablemate Target languishes.
Bunnings, also owned by Wesfarmers, recorded almost $19bn in revenue last financial year, compared with $13.2bn five years ago, but base pay rates at the hardware giant are rising by just 3% a year.
The slow growth comes for workers who are already among the lowest paid in the nation and they tend to feel inflation more severely than higher-salaried workers, given a larger portion of their wages go to essential items and they have less discretionary income to make spending adjustments.
Economists, including Isabella Weber, also reference “cheapflation”, whereby the price of cheaper varieties of essentials, such as plain sliced bread, rise faster than premium varieties because of increased demand for lower-cost products.
Those households already buying the cheapest kind of bread are stuck paying the fast-rising prices, unlike those who can trade down from artisanal varieties to a cheaper product.
“Coles is acutely aware of the cost-of-living pressures faced by Australian households and families” a spokesperson said in response to questions from Guardian Australia.
“This profit analysis is inaccurate in relation to Coles. Coles pays above-award rates.
“Our retail enterprise agreement offers above-award pay for nearly 100,000 team members, greater flexibility, mechanism for future wage increases and enhanced leave entitlements.”
A Woolworths spokesperson said: “Rates of pay for our store team members are linked to the industry award. We work hard to offer rewarding long-term employment opportunities by investing in professional development, offering flexibility and providing our team with extra benefits when they shop.
“In the financial year 2024 alone, across the entire Woolworths Group, we paid employee benefits of $10.8bn.
“Improvements in profitability over time reflect the ongoing growth of the business through new stores and categories, the achievement of returns from the material capital invested over time, and growth of new businesses and propositions.”
