Are printers really paying too much in wages?

Industry gadfly, James Cryer, bites back at the suggestion that high wages are a problem for the printing industry.

In the current issue of Print21 magazine, Hagop Tchamkertenian, the industry's sole full-time economist, claims the industry's wages bill is too high. In his opinion the secret of how to make a buck in the printing industry is to reduce your labour costs.

As far as I'm concerned this earth-shattering revelation can be implemented in one of three ways.

One being to simply front up to all your employees and say,“You’re all costing me a fortune, I’m knocking 10% off everyone’s wage packet – starting next week!”

Or, you could say – “Dear valued employees, the PIAA advises that we’re employing too many people and we’ll be drawing lots tomorrow in the staff canteen to find out which of you will get the chop.”

Or, you could say in more polite terms, “I’ve evaluated the optimal man/machine mix, and have come to the conclusion that I need to substitute more capital for labour, which means, I’m buying a big new press so I don’t need to employ so many tradesmen.”

We know this is happening among many high-profile firms – Southern Colour, Bambra, Label House and Jaypak in WA, to mention just a few, who have proudly proclaimed the power of their new press and its capacity to replace multiple bodies with just one.

So far, so good. Hagop should be pleased to endorse all the above, as such strategies will result in achieving a lower cost-base.

But hang on. Aren’t there a couple of road-blocks to this theory?

One is that we’re about to embark on a recruitment drive to attract and retain more staff. Is Hagop is advocating we should employ fewer people? Perhaps we should call a halt to the new industry training initiative?

Another is that I know a small but highly successfull digital-centre whose boss deliberately pays his staff over market rates. Do we advise this manager that he’s got it all wrong – he should go back and reduce their wages. Presumably this is what Hagop meant when he wrote labour costs are “clearly impacting on the bottom line.”

I don’t believe the solution is as clear-cut as he may think. We are in the midst of a massive transition from labour to capital.

I have another explanation. I suspect that two forces have been operating in concert to throw the unsuspecting economist off guard.

One is the fact that the cost of other inputs, such as paper, have dropped faster than labour costs, which creates the illusion that labour is too high.

The second is that dramatic improvements in workflow and other efficiencies in recent years, have resulted in some reductions in price, which again makes labour look higher in relative but not in actual terms.

But this is the fun of being an economist – you can stir the tea-leaves, peer into the abyss, and come to virtually whatever conclusions you like. It reinforces my belief that economists should not try to tell proprietors how to run their business.

As someone said to me recently – be sure of your facts!

To read Tchamkertenian's report as it appeared in the Print21 October issue, click here.