Wesfarmers boss wants to see more productivity

afr.com:

Wesfarmers boss Rob Scott said strong wages growth unmatched by corresponding productivity gains is one of the factors that could influence the Reserve Bank to raise interest rates before Christmas.

Mr Scott said this was “a risk for the nation, and it’s a risk for the economy”, speaking to The Australian Financial Review in Perth on Thursday ahead of Wesfarmers’ annual general meeting.

While the WA conglomerate expects inflationary pressures to be sustained throughout 2023-24, spurred on by geopolitical tension and rising energy costs, some of the problem lay with settings in the labour market.

Rob Scott, right, and Michael Chaney, left, in Perth on Thursday. Trevor Collens

“The other more domestic pressure is where we’ve seen wages go up more strongly, which is a good thing, but unfortunately productivity is very weak,” he said. “Unit labour costs over the last year have gone up 5.8 per cent, so those domestic cost pressures are certainly putting pressure on prices.”

Wesfarmers chairman Michael Chaney told the meeting that the federal government’s signature industrial relations legislation would make it harder to employ casuals. “The proposed changes will result in fewer jobs and lower wages for Australian workers.”

Trading at hardware chain Bunnings is holding up in the new financial year with consumers shunning big-ticket purchases but still buying for DIY projects, repairs and maintenance.

Mr Scott told investors that Bunnings had increased foot traffic in the year-to-date.

“Trading performance for the first 16 weeks of the 2024 financial year has generally continued in line with the update we provided at the full-year results in August,” he said. “Bunnings’ sales growth remains in line with the second half of the