Wages still rising, jobs still falling

Tuesday 4th August 2009

Labour costs continue to rise, despite a slowdown over recent quarters, with public sector wages increasing at 3.6% in the year to June, compared to 2.7% in the private sector.

Statistics New Zealand's Labour Cost Index, released this morning, shows that between March and June, public sector wage and salary costs (including overtime) rose 0.4%, compared with 0.3% in the private sector. Health and community service labour costs, including overtime, rose 4.4% in the year to June and education wages were up 4.0%.

In the private sector, the largest increase was in telecommunications services, up 3.2%. The construction, wholesale trade and manufacturing sectors all reported slight falls in their labour costs, reflecting the recession.

Rising labour costs peaked on annual basis in September last year, and have been falling since.

In the year to June, 55% of salary and ordinary time wage rates increased, down from 60% in the year to the March 2009, while in the June quarter, only 10% of the sample recorded increased pay rates.

The Quarterly Employment Survey, also released this morning, shows average hourly earnings increased 4.5% in the year to the June 2009 quarter. The QES average earnings statistics reflect not only changes in pay rates, but also composition and other workforce changes.

Despite the ongoing increase in earnings for those in work, the QES found that seasonally adjusted total paid hours decreased 3.4% over the year to June, there were 3.2% fewer full-time emloyees than a year earlier, and the total number of filled jobs fell by 2.1%.

The LCI is the lowest recorded since the year to June 2005, when a 2.7% increase was recorded. The LCI andQES both come two days ahead of the most-watched employment barometer, the Household Labour Force Survey.

Prime Minister John Key hedged his bets yesterday on the outlook for Thursday's unemployment figures, but noted that the numbers registering for the unemployment benefit in recent weeks had dropped to well below the previous running average of more than 1,000 a week.

Around 45% of would-be registrants for the dole were finding jobs through the Ministry of Social Development, which was also reporting a surge in job availability, reflecting a mood of cautious optimism about an economic recovery towards the end of the year.

Businesswire.co.nz

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