The Benchmarking Group crunches census data from the Australian Bureau of Statistics (ABS) to reveal how tax profession salaries add up.
Does it pay to be an accountant? The numbers don’t lie!
The numbers are in and confirm what most know: accountants earn a higher-than-average income. However, when compared to equally skilled counterparts in other industries, an accountant’s wage lags behind.
Looking at the 2021 and 2006 ABS census statistics, the Benchmarking Group compared the average full-time weekly income for accountants against all workers in Australia.
Accounting pays off
Overall, accountants enjoy a higher salary than the average Australian. However, this gap has been decreasing.
In 2006, the average full-time weekly earnings for accountants were 35 per cent higher than the comparable figure for all workers. By 2021, this gap had reduced to 17 per cent. While this figure is still large, it shows that many other professions are catching up to the historically prestigious wages of accountants.
Insights to consider: When recruiting for accounting positions, it is worth comparing salaries from other industries to ensure remunerations are competitive. For skilled accountants seeking higher earnings, other industries and professions could be tempting.
The great divide
Women working full-time as accountants earn 19 per cent less than their full-time male counterparts. The slightly positive news for females is that this gap has reduced since 2006, when it was 23 per cent.
Across Australia, the full-time gender-based earning gap (using data from the latest ABS census) is 14 per cent, which has decreased from 18 per cent in 2006.
When analysing the income brackets, this divide is most pronounced in the higher earning bracket. This is also the reason the pay gap is greater in accountancy than in other industries.
For accountants, 16 per cent of full-time males take home more than $3,500 a week compared with only 5.5 per cent of females. These findings are echoed in other studies highlighting that in the accounting industry, the pay gap widens with seniority.
Insights to consider: There are now more female accountants than males, so addressing the pay gap should be a priority for the industry to retain female accountants and attract professional women to the industry.
A boom for the boomers
According to the data, earnings for accountants peak at 50–59 years old. This is older than peak earnings for all Australians, at 40–49 years of age.
The decline in income as professional workers pass 60 is common in most developed economies. As workers reach retirement age, those with satisfactory nest eggs will leave the workforce. Thus, workers earning less and still saving for retirement will remain in the workforce.
Insights to consider: The data suggests many high-earning accountants (most likely in management and/or partner positions) will consider retirement post 60 years of age. Firms should ensure they have succession and training plans in place to develop future leaders for retiring cohorts.
What’s in a skill level?
Accountants are highly skilled, with all deemed Skill Level 1 according to the ABS. This is the highest of the five skill levels and most Australians in this bracket are also the country’s highest income earners.
However, when compared to their highly skilled counterparts, accountants fall behind. Overall, Australians with Skill Level 1 qualifications earn $1.10 for every dollar pocketed by an accountant.
Note: Occupations at Skill Level 1 have a level of skill commensurate with a bachelor’s degree or higher qualification.
Insights to consider: the role of the accountant can be transferable to other highly skilled occupations such as business advisers, CFOs and CEOs. Therefore, the industry should focus on the retention of its skilled professionals to ensure they are not lured to higher paying non-accounting professions.
The state of income
The full-time weekly income for accountants varies less across the states than the overall average Australian full-time earnings. Accountants in the nation’s capital take home the most, and 15 per cent more than accountants based in the Northern Territory.
When looking at all industries, this difference is much larger. On average, Tasmanian full-time workers earn only 74c to every dollar earned by their ACT counterparts.
Insights to consider: For most professional industries, location is becoming less crucial. In many cases, an accountant can successfully work for a NSW-based firm from a residence in Victoria. With an increase in remote working, wage disparity between states should continue to diminish over the next decade.
What do the next five years hold?
Over the next five years, it is largely inevitable that Australian wages will continue to grow. For accountants, we forecast the next census (in 2026) will show:
- Defined jump in full-time earnings: we expect full-time income to increase slightly higher than CPI over this period. This is due to the high demand for professionals in the industry and the aging cohort of accountants.
- Hourly wages will jump with workplace flexibility: there will most likely be a slow but certain shift in firms adopting four-day weeks or nine-day fortnights. This should see hourly rates increase as workers receive full-time compensation while working reduced hours.
- The gender pay gap should reduce, but maybe not enough: the gap should continue to narrow as more females enter management and partnership positions. However, the gap will remain behind the Australian average unless there is more focus on gender-earning equality at the partnership level.
There is no question that accountants will continue to earn above-average salaries for the foreseeable future. However, with low unemployment resulting in a competitive employment market, it may be the opportune time for firms to review their employee wages and ask: Do our numbers add up?
Please note, the 2021 data was captured in August 2021 and is a snapshot in time. Thus, the data may vary from other ABS reports after/before this date.
Julia Thomson is head of data analytics and content at the Benchmarking Group.