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Welcome rise in the share of wages and salaries in New Zealand’s income

Working people welcome the modest rise in the share of New Zealand’s income that is received by wage and salary earners in the year to March. It is a step in the right direction,” says CTU President Richard Wagstaff.

“National income statistics released by Statistics New Zealand today show more good news for wage and salary earners in that our share of NZ’s total income is growing again after nearly a decade of going backwards. This news comes on the back of last week’s figures from StatsNZ strong record wage growth on the back of effective union collective bargaining.”

“We do need to keep this in perspective because we have a long way to go before the share even matches the OECD median, let alone that of successful societies and economies such as Denmark.”

“Countries like Denmark set wages through widespread use of industry or sector bargaining like Fair Pay Agreements, setting a floor for enterprise collective agreements. So while these figures are welcome news, until we get a system in place like Fair Pay Agreements, and achieve a modern, more inclusive wage setting system, we will struggle to become even average in the OECD when it comes to sharing our nation’s wealth fairly with wage and salary earners.”

“Better systems of collective bargaining are long overdue. That is why we have been urging the Government to act on Fair Pay Agreements with urgency.”

National income statistics released by Statistics New Zealand today show that the share of income paid to wage and salary earners (the labour share of income) fell in the year to March 2018 – a revision from last year’s publication which showed it as close to static. It rose in the most recent year (to March 2019), restoring that fall. As a proportion of New Zealand’s domestic income after taking account of depreciation (Net Domestic Income), the share was 58.0 percent in the year to March 2018 and has risen to 58.9 percent in the year to March 2019, restoring it to where it was in the year to March 2017.

“That is a modest rise, but still meaningful. Each percentage point is worth approximately $1,000 per year to the average wage and salary earner. But wage and salary earners have still on average lost $2,500 per year due to the fall in the labour income share since 2009. If the share was at the level of 1981 (similar to Denmark’s current level), they would be $12,700 per year better off,” Wagstaff said.