SALARY INCREASES REMAIN SUBDUED Salaries of professional engineers rose only marginally over the past year according to the results of the June 2015 Professional Engineer Remuneration Survey, published by Professionals Australia. Average annual increase GRAPH 1 - ANNUAL SALARY INCREASES BY EMPLOYMENT SECTOR VS ECONOMIC INDICATORS The survey, conducted over October and November this year, attracted over 1,400 responses, analysis of which showed an average annual increase in professional engineer salaries of 2.9% across all sectors combined. The result compares with an annual increase in salaries of 3.3% reported in June 2014. The Australian Bureau of Statistics Consumer Price Index rose by 1.3% in the 12 months to the end of March 2015 whilst its Wage Price Index series rose by 2.3% over the same period. 2.9% 3.1% 2.7% 3.5% 2.8% 2.3% 1.3% All Private Public Mfg Sector Non-Mfg Wage Price Index (Mar '15) Consumer Price Index (Mar '15) GRAPH 2 - ANNUAL SALARY INCREASES 2009-2015 (JUNE REPORTS) The survey found respondents employed in the non-manufacturing sector had received an average increase in annual salary of 2.8%, whilst the manufacturing sector, comprising mostly private sector respondents, reported an average increase in annual salaries of 3.5%. 4.4 3.9 4.9 4.9 4.4 4.2 4.0 3.8 All Private Public Graph 2 shows average rate of increase in professional engineer salaries had slowed dramatically over the last few years, supporting anecdotal evidence of a sizeable slowdown in demand for professional engineer services, notably in the mining industry. % 3.2 3.6 3.7 3.3 3.4 3.1 2.9 2.7 2010 2011 2012 2013 2014 2015 GRAPH 3 - AVERAGE ANNUAL SALARY INCREASE BY INDUSTRY Communication inc Telstra Electricity & Gas supply Chemical & Petroleum Water, Sewerage & Drainage Other Consulting & Tech Services Construction, Contract, Maint. Transport & Storage Public Administration Transport Equipment Defence 3.5% 3.3% 3.1% 3.0% 2.7% 2.5% 2.0% 3.1% Average annual increase Salary growth was generally similar across most industries although the impact on salary growth of Federal and State government wage fixing policies saw wages increase by only 2-3 per cent in industries where these governments were predominant employers. 1
Mean annual increase JUNE 2015 PROFESSIONAL ENGINEER annual package value GRAPH 4 MEDIAN PACKAGE BY RESPONSIBILITY LEVEL $242,011 $202,226 $154,182 $121,688 $99,981 $74,387 Level 1 Level 2 Level 3 Level 4 Level 5 Above 5 Responsibility Level Graph 4 illustrates the relationship between remuneration and responsibility level, and shows respondents at Level 5 earning around 3.5 times the average total package incomes of those at Level 1. Total package is defined as the sum of base salary, employer superannuation contributions, value of employer-provided motor vehicles, performance pay, and the value of any other cash and non-cash benefits provided. GRAPH 5 GRADUATE COMMENCING SALARIES $57,250 $62,961 $73,000 $64,843 Graph 5 shows graduate engineer respondents commencing work during the last twelve months earned a median base salary of $62,961 on commencement. The amounts shown for graduates do not include compulsory employer superannuation contributions. Annual salary (excl. superannuation) Mean GRAPH 6 MEAN ANNUAL INCREASE BY STATE/TERRITORY 4.1% 3.1% 2.8% 2.8% 2.6% 2.5% 2.3% Comparing States & Territories, Graph 6 shows that respondents located in Western Australia recorded the highest average increase in salaries at 4.1%, whilst the Northern Territory saw the lowest rate of average increases at 2.5%. Insufficient responses were received from respondents located in the ACT for reporting purposes. WA VIC NSW TAS QLD NT SA State/Territory GRAPH 7 MEAN ANNUAL INCREASE BY ENGINEERING DISCIPLINE Mean annual increase Graph 7 shows mechanical engineers reported the highest average increase in salaries of 3.1%. 3.1% 3.0% 3.0% 3.0% 2.8% 2.6% 2.0% The rate of increase in annual salaries across most disciplines was seen to be very similar at around 3%. Mechanical Environmental Civil & Structural Chemical Aeronautical Electrical Electronic/ Comm Engineering discipline 2
TABLE 1 MEDIAN SALARY & PACKAGE ALL SECTORS ALL FULL-TIME RESPONDENTS Level 1 Level 2 Level 3 Level 4 Level 5 Above Level 5 Consulting & Tech Services Construction, Contract, Maint. Mining or Quarrying Oil/Gas Explrtn/Prodn Electricity & Gas supply Water, Sewerage & Drainage Communication inc Telstra Defence Public Administration Transport & Storage Transport Equipment Appliances and Electricals Industrial Equip & Machinery Other 60,000 65,782 79,992 90,010 95,000 110,664 135,000 159,322 175,000 206,626 147,500 171,538 63,750 78,625 75,000 88,788 97,232 115,100 121,680 152,952 179,000 218,668.. 80,000 96,031 90,004 117,301 120,000 139,585 162,500 207,630.... 79,000 91,033 100,600 110,157 145,000 167,037 180,000 239,089.... 84,000 99,469 97,000 114,274 115,217 132,501 151,500 177,804 165,454 204,832.. 70,911 91,206 83,000 97,805 101,975 121,686 124,699 148,836 153,209 182,893.. 55,000 61,600 82,271 90,849 104,000 123,188 140,400 172,610.... 63,236 70,411 79,216 91,864 104,180 119,140 133,905 150,571 134,000 149,204.... 78,000 93,531 95,267 118,268 119,000 144,750 160,000 202,658.. 63,000 78,000 95,878 108,071 103,500 117,059 121,655 136,400 171,314 196,968.... 86,125 102,236 100,300 128,048 118,500 137,975 170,628 238,751.... 68,500 86,550 122,710 134,367 110,350 137,452.... 61,187 73,741.. 101,538 114,458...... 61,765 71,958 86,613 104,468 104,000 115,262 130,000 148,079 158,836 194,357.. 64,000 74,837 82,986 99,981 103,505 121,779 130,000 154,182 165,727 202,226 204,000 242,011 TABLE 2 SALARY & PACKAGE BY YEARS OF EXPERIENCE ALL SECTORS ALL FULL-TIME RESPONDENTS Less than 1 1 to less than 2 2 to less than 3 3 to less than 4 4 to less than 5 5 to less than 6 6 to less than 7 7 to less than 8 8 to less than 9 9 to less than 10 10 to less than 12 12 to less than 14 14 to less than 16 16 to less than 18 18 to less than 20 20 to less than 25 25 to less than 30 30 to less than 35 35 or more N SALARY Mean PACKAGE 25 50,000 56,667 60,000 77,000 80,000 65,500 61,600 64,413 75,803 90,863 104,660 80,299 39 50,000 58,848 63,000 68,564 87,700 65,223 55,650 65,700 74,602 91,206 101,200 77,870 33 59,000 63,236 68,128 82,953 89,666 71,970 66,808 70,710 86,107 97,709 106,892 85,691 45 60,000 66,600 73,000 82,000 98,555 76,195 66,808 76,813 87,509 106,622 122,268 92,563 44 60,000 70,500 82,801 97,484 112,000 86,081 65,780 83,068 94,872 115,717 126,472 99,491 49 67,343 76,300 82,495 100,000 106,000 88,895 80,935 88,304 101,208 117,225 145,668 107,272 35 81,000 84,184 100,000 121,000 124,000 104,506 89,790 99,935 114,975 138,069 155,192 121,630 36 70,000 83,483 99,500 110,192 128,000 98,556 85,353 92,470 117,322 128,247 145,800 114,069 26 75,000 84,164 100,000 114,600 134,063 101,471 84,510 93,364 113,710 130,124 154,843 115,576 21 75,000 88,226 100,000 121,000 130,000 110,094 88,570 100,400 121,277 141,255 162,537 129,177 59 85,000 100,000 107,000 126,000 155,000 118,357 98,550 113,546 130,873 163,159 208,518 146,114 31 88,000 97,464 113,000 130,000 150,000 115,933 101,221 120,254 136,875 158,002 173,250 139,137 62 90,000 96,000 114,500 133,000 180,000 123,007 105,779 112,770 135,381 157,826 219,389 147,651 40 97,300 108,191 126,000 156,235 173,000 134,030 108,690 123,302 147,658 184,146 207,110 157,354 41 84,000 102,896 119,000 132,000 156,000 120,450 94,170 114,571 135,756 170,782 190,843 144,241 87 100,000 109,000 130,000 150,517 183,000 132,640 114,500 128,529 151,110 177,389 221,267 160,282 93 94,000 106,000 124,000 147,009 175,000 134,094 110,322 125,014 148,647 181,262 209,990 161,516 89 90,000 120,000 137,000 160,592 185,000 142,789 108,417 139,076 160,079 188,700 214,787 169,809 105 100,000 115,000 135,000 163,000 183,000 139,813 118,946 134,546 165,619 199,565 220,990 168,982 960 67,900 86,000 109,000 135,000 164,750 114,778 81,916 100,487 128,928 162,866 198,862 137,365 Mean 3
A trend in the employment of professional engineers is the increasing number opting to practice as contract engineers. Employers of professional engineers are making greater use of such arrangements as a means of meeting peak workloads or to engage contract professionals for specific projects or tasks. The Australian Bureau of Statistics estimates that up to 20 per cent of the workforce is now engaged in non-standard work arrangements with professionals operating as independent contractors or consultants among the fastest growing group. Ultimately, the hourly rate charged depends on the market for the service provided and there is no substitute for specific knowledge of the particular industry and the value of the service being offered to a client, but these rates can be used as a benchmark to ensure that contractors don t undercharge for their services. These hourly rates should be read in conjunction with Professionals Australia s Standard Terms of Engagement and Professionals Australia s Guide to Writing Contracts for Independent Contractors and Consultants. Both documents take account of important issues arising from changes to Personal Services Income rules effective July 2000. The changes will potentially impact on contractors and consultants engaged on an hourly basis. These documents are available to members from Professionals Australia s website at www.professionalsaustralia.org.au. The hourly rate for contract engineers takes into account the conditions of employment which apply to employee professional engineers, as contract professional employees must meet this cost themselves. Professional engineer employees have access to the Australian Industrial Relations Commission and receive annual leave, sick leave, paid public holidays, long service leave, superannuation, jury leave, compassionate leave, family leave, professional development and retrenchment/ redundancy provisions. The contract engineer may be engaged on an hourly basis and generally does not have access to these provisions. The contract engineer must take such provisions into account when determining the hourly fee to be charged. Based on a 38 hour week, the hourly fee is calculated using a 1980 hour year (i.e. 38 hours by 52.1 weeks) and deducting from the year the following factors: Public Holidays 12 days 92 hours Annual Leave 20 days 152 hours Long Service Leave 4.3 days 33 hours Sick Leave 10 days 76 hours Salary Continuance 3% 60 hours Superannuation 10% 198 hours Professional Indemnity (inc pub. liability) 3% 60 hours Misc. leave (family, jury, etc) 3 days 23 hours Professional Development 5 days 38 hours Termination/Redundancy 5 days 38 hours 770 hours Thus the hourly rate should be calculated on the basis of about 1210 hours (1980-770). Base Salary GRAPH 8 - COMPONENTS OF HOURLY RATE FOR CONTRACT WORK Superannuation Professional Development Sick Leave Annual Leave Miscellaneous Leave Public Holidays Long Service Leave Salary Continuance Professional Indemnity Termination/Redundancy Any travel costs and workers compensation would be on top of these rates, and it may be necessary to factor in an additional charge to cover legal and accounting fees. Care should also be taken to allow for rising professional indemnity insurance premiums. ASIC fees may also need to be covered depending on the particular business entity or structure the consultant or contractor has in place. If the contract engineer is engaged on a short-term basis, a further factor should be included to allow for the time and overheads involved in seeking contracts. A factor of 20% would not be unreasonable for this purpose. The hourly rate should then be based on 1000 hours. Using the formula described here, a contract engineer seeking a salary equivalent of say $100,000 per annum would calculate the hourly fee as follows: Short-term contract Long-term contract $100,000/1000 hours = $100.00 p/h $100,000/1210 hours = $82.65 p/h Market Rates The survey found the median hourly rate of pay for short-term contractors was $125 compared to $115 for long-term contractors. These rates do not include GST. SHORT TERM ($ p/h) LONG TERM ($ p/h) Level 1 50-70 50-60 Level 2 75-100 75-95 Level 3 95-125 90-120 Level 4 120-150 105-125 Level 5 150-200 125-175 Contract Agency Rates If the contract engineer is engaged through a contract agency, some components such as workers compensation/ disability insurance and superannuation contributions would normally be paid for by the agency. These components would be removed from calculations. The result would be to increase the number of hours upon which an hourly calculation is based. A typical calculation made by a contract agency might see the annualised hours rise to around 1600, so that the hourly rate for an equivalent $100,000 employee salary would be $100,000/1600 hours = $62.50 per hour. 4
RESPONSIBILITY LEVELS DEFINITIONS Level 1 Professional Engineer The graduate engineer (as defined) commencement level. The engineer undertakes initial professional engineering tasks of limited scope and complexity, such as minor phases of broader assignments, in office, plant, field or laboratory work. Under supervision from higher-level professional engineers as to method of approach and requirements, the professional engineer performs normal professional engineering work and exercises individual judgement and initiative in the application of engineering principles, techniques and methods. In assisting more senior professional engineers by carrying out tasks requiring accuracy and adherence to prescribed methods of engineering analysis, design or computation, the engineer draws upon advanced techniques and methods learned during and after the undergraduate course. Training, development and experience using a variety of standard engineering methods and procedures enable the professional engineer to develop increasing professional judgement and apply it progressively to more difficult tasks at Level 2. Decisions are related to tasks performed, relying upon precedent or defined procedures for guidance. Recommendations are related to solution of problems in connection to the tasks performed. Work is reviewed by higher-level professional engineers for validity, adequacy, methods and procedures. With professional development and experience, work receives less review, and the professional engineer progressively exercises more individual judgement until the level of competence at Level 2 is achieved. The professional engineer may assign and check work of technical staff assigned to work on a common project. Level 2 Professional Engineer Following development through Level 1 he/she is an experienced engineer (as defined) who plans and conducts professional engineering work without detailed supervision, but with guidance on unusual features and who is usually engaged on more responsible engineering assignments requiring substantial professional experience. Level 3 Professional Engineer A professional engineer performing duties requiring the application of mature professional engineering knowledge. With scope for individual accomplishment and co-ordination of more difficult assignments, the professional deals with problems for which it is necessary to modify established guides and devise new approaches. The professional engineer may make some original contribution or apply new professional engineering approaches and techniques to the design or development of equipment or special aspects of products, facilities and buildings. Recommendations may be reviewed for soundness of judgement but are usually regarded as technically accurate and feasible. The professional engineer makes responsible decisions on matters assigned, including the establishment of professional engineering standards and procedures, consults, recommends and advises in speciality engineering areas. Work is carried out within broad guidelines requiring conformity with overall objectives, relative priorities and necessary cooperation with other units. Informed professional engineering guidance may be available. The professional engineer outlines and assigns work, reviews it for technical accuracy and adequacy, and may plan, direct, co-ordinate and supervise the work of other professional and technical staff. Level 4 Professional Engineer A professional engineer required to perform professional engineering work involving considerable independence in approach, demanding a considerable degree of originality, ingenuity and judgement, and knowledge of more than one field of, or expertise (for example, acts as his/her organisation s technical reference authority) in a particular field of professional engineering. The professional engineer: initiates or participates in short-range or long-range planning and makes independent decisions on engineering policies and procedures within an overall program; gives technical advice to management and operating departments; may take detailed technical responsibility for product development and provision of specialised engineering systems, facilities and functions; co-ordinates work programs; and directs or advises on use of equipment and material. The professional engineer makes responsible decisions not usually subject to technical review, decides courses of action necessary to expedite the successful accomplishment of assigned projects, and may make recommendations involving large sums or long-range objectives. Duties are assigned only in terms of broad objectives and are reviewed for policy, soundness of approach, accomplishment and general effectiveness. The professional engineer supervises a group or groups including professional engineers and other staff, or exercises authority and technical control over a group of professional staff, in both instances engaged in complex engineering applications. Level 5 Professional Engineer A professional engineer usually responsible for an engineering administrative function, directing several professional and other groups engaged in inter-related engineering responsibilities, or as an engineering consultant. Achieving recognition as an authority in an engineering field of major importance to the organisation. The professional engineer independently conceives programs and problems to be investigated and participates in discussions determining basic operating policies, devising ways of reaching program objectives in the most economical manner and of meeting any unusual conditions affecting work progress. The professional engineer makes responsible decisions on all matters, including the establishment of policies and expenditures of large sums of money and/or implementation of major programs, subject only to overall policy and financial controls. The professional engineer receives administrative direction based on organisation policies and objectives. Work is reviewed to ensure conformity with policy and co-ordination with other functions. The professional engineer reviews and evaluates technical work; selects, schedules, and co-ordinates to attain program objectives: and/or as administrator, makes decisions concerning selection, training, rating, discipline and remuneration of staff. 5
TERMS USED For the purposes of analysis, the following statistics were used: decile the value below which 10% of data was recorded. quartile (Q1) the value below which 25% of data was recorded. the value below which 50% of data was recorded. quartile (Q3) the value below which 75% of data was recorded. decile the value below which 90% of data was recorded. Mean the sum of individual values divided by the number of data items. Base salary annual salary excluding allowances or noncash benefits Total Package annual salary plus the value of all components of remuneration items such as motor vehicle, performance pay, superannuation, overtime & award allowances. ONLINE ACCESS Members of Professionals Australia and subscribers to the Professional Engineer Remuneration Survey Report are able to access salary results on the Professionals Australia website. Users can select a combination of position-related parameters and query the database to return specific remuneration levels related to the query. Parameters by which analysis may be performed include state, industry, qualification, years of experience, employment sector, engineering discipline and responsibility level. The Professional Engineers Salary Calculator is available at www.professionalsaustralia.org.au/financial-edge/salarycalculators/engineers-calculator/. Members will need to use their membership number to login. ABOUT THE SURVEY The June 2015 Professional Engineer Remuneration Survey was conducted during March/April 2015 using professional engineer members of Professional Australia. 1,439 completed questionnaires were returned and were used for the analyses contained in the report. HOW TO ORDER This extract is a summary of the full 128-page Professional Engineer Remuneration Survey Report. Non-members can purchase a single issue for $330 (inc. GST). Professionals Australia members receive a significant discount on these prices, but cannot purchase the report on behalf of any third party at the discount price. June 2015 Professional Engineer Remuneration Survey Report For more information about purchasing the Professional Engineer Remuneration Survey Report, visit the Professionals Australia website at www.professionalsaustralia.org.au/ financial-edge/salary-survey-reports/professional-engineers/ where you can download and complete an order form or order online via secure ecommerce. If you have any questions, please contact the Surveys Unit via email survey@professionalsaustralia.org.au or phone (03) 9695 8839. Copyright 2015 by The Association of Professional Engineers, Scientists & Managers, Australia All rights reserved. No part of this work may be reproduced or stored in any form, especially typographically, electronically and including photocopying, without written permission of the publisher. The use of material for private study, research or criticism is excepted from the reservation and may be undertaken within the accepted meaning of fair dealing. The publisher makes no representation, in any form, as to the accuracy of the information contained in this work and cannot accept any legal responsibility for errors, omissions or consequences of any action taken by readers. ISSN 2203-1162 (previously ISSN 1444-7495) Professionals Australia (formerly APESMA) GPO Box 1272 Melbourne VIC 3001 Ph: (03) 9695 8835 Fax: (03) 9695 8846 Email: survey@professionalsaustralia.org.au Website: www.professionalsaustralia.org.au 6