Pay rises slow, but still coming through 2.2.10

Though employment and hours worked are still falling, pay rates continue to show signs of upward movement, said CTU Economist and Policy Director Bill Rosenberg as Labour Cost Index and Quarterly Employment Survey figures were released today.

“Continuing these upward movements is essential if New Zealand wages are to move to parity with Australia, and we are to come out of this recession with a positive outlook,” said Rosenberg. “There is little evidence of a pay freeze. Instead there have been modest pay rises.”

“However there is cause for concern that employment is still falling, and unemployment has far from peaked. In the year to December, the number of full-time equivalent employees fell 2.5 percent and filled jobs fell 1.7 percent, hit hard by the decline in manufacturing and construction. Paid hours continued to fall. For many workers and their families, the recovery is not yet in sight. In these circumstances it would be doubly short sighted to allow wages to stagnate and risk the loss of stimulus to the fragile recovery that has started to occur.”

Average wage rates rose by 4.0 percent in the year to December. The average ordinary time wage is now $25.37 - a fall of 0.2 percent from $25.42 in the September quarter but a rise from $24.40 in December 2008. This further underlines the unfairness of the 2 percent increase in the minimum wage announced by the government last week.

The Labour Cost Index shows lower increases – 1.8 percent in the year to December quarter compared to 2.1 percent in September for salary and ordinary time wage rates. The rise was 0.4 percent over the December quarter.

However, of those that received a rise, the median rise was 3.7 percent and the average increase was 4.4 percent, less than last quarter (4.8 percent) but still a significant increase.

Rosenberg added that he thinks there will be growing pressure on wages in the coming year.