As Prime Minister Kevin Rudd calls for executives to show more restraint in remuneration growth, the mining sector has moved ahead with generous wage rises to executives.
Analysis released by recruitment consultancy Derwent Executive shows remuneration for white-collar workers in the mid-tier mining sector has improved 200 per cent year-on-year since 2005-06.

The study also shows that executives earning a base salary between $200,000 and $700,000 in the mid-tier - companies with market capitalisations between $500 million to $8 billion - have enjoyed salary growth averaging 55 per cent in the same period.

Skills shortage drives up wages

The rise in the salaries outpaced much of the gains in market capitalisations and profit performances for miners in the sector, which include top-tier stocks such as Newcrest, Oxiana and Zinifex.

The increases recorded for professional positions such as accountants and managers again highlight the critical nature of the skills shortage in the resources sector.

Economists note that they are yet to see the effects of wage-push inflation in the economy - although it has been highlighted by the Reserve Bank - and successive interest rate rises have done little to prevent wages from spiralling in the sector.

ANZ chief economist Saul Eslake said there was a rising risk that wage growth would soon flow through to inflation. That the influence of wages had been fairly benign during the resources boom had been due to a number of reasons, including the fairly low levels of inflation over the past 15 years and the declining power of trade unions.

"The changes in the industrial relations framework have made it harder for large wage claims in the mining industry to flow through to other sectors," Mr Eslake said. Most of the upward pressure on remuneration in the mid-tier is due to the heightened merger and acquisition activity, which has made it harder to find professionals to fill positions.

The head of a mergers and acquisitions team was paid a base salary, on average, of about $220,000 in 2005-06 and might have been on a total salary package of $371,000. The position could now attract a total salary package upwards of $1 million.

A chief executive's salary package - including performance incentives - would attract close to $4 million in 2006-07, according to Derwent's figures. It would have been about half that just 12 months before.
"Demand for mining sector executives in the $200,000 and above range is red-hot," Derwent Executive partner Jason Foley said.