Increases in salary and wage rates have slowed for the third successive quarter according to Statistics New Zealand’s labour cost index (LCI). Salary and wage rates, including overtime, rose 1.7% in the year to the March 2013 quarter, and only 0.4% in that same quarter.
The LCI tracks around 6,000 jobs in New Zealand and reflects changes in what employers pay for the same work executed at the same standard. In other words, it accounts for rises to match the market, to retain staff, or reflect the cost of living, but it doesn’t encompass performance- or service-based pay rises.
There was little difference between private and public sector rate increases. While in the former, salary and ordinary time wage rates increased 1.8% in the year to this quarter, public sector rates rose 1.5% in the same period.
Slightly more than half (56%) of surveyed rates rose in the year to this quarter, and of those the median increase was 2.9%. This is the lowest median increase in almost two years. In addition, only 13% of surveyed rates rose during the quarter, with the median increase being 2.4% - the lowest in 12 years.
The Council of Trade Unions (CTU) has issued a statement calling the wage rises ‘disappointing’ given the wider economic recovery in New Zealand. “Wages need to rise significantly if we are to keep people in New Zealand, close the gap with Australia and encourage them to use their skills in this country,” Bill Rosenberg, CTU economist, said.
The figures also came as a surprise to Felix Delbrück, senior economist with Westpac. “Today’s labour market reports were on the soft side of both market expectations and our own,” he said. “Annual wage inflation eased and jobs growth continues to lag behind the broader economic recovery,” he added.
However, Delbrück also pointed out that in real, inflation-adjusted terms, there has been ‘decent wage growth’ over the past year.