Wage and employment data shows tight labour market continues

By NZPA

Monday 4th November 2002

An increase in New Zealand's private sector earnings in the August quarter was the biggest in more than 12 years, providing more evidence of an increasingly tight labour market.

The 1.8 percent rise in private sector average total hourly earnings for the August quarter was well ahead of economists' forecasts of a 0.9 percent increase.

Statistics New Zealand's Quarterly Employment Survey also showed private sector average ordinary time earnings, the Reserve Bank's wage inflation benchmark, rose 2.5 percent in the year to August 2002. That was higher than expectations of a 1.8 percent rise.

ANZ chief economist David Drage told NZPA the increase was the biggest quarterly rise since the February 1990 quarter.

"It would appear overall the risks associated with a tight labour market are beginning to be realised.

"Anecdotal reports have suggested that in the face of a very tight labour market and widespread shortages of skilled labour, firms in some industries have had to pay up in order to retain and attract the labour they need.

"That appears to be slowly coming through in the data now."

Total private sector ordinary time earnings were up 3.1 percent compared with a year ago, against economists' forecasts of 2.4 percent.

Public sector average hourly earnings rose 1.8 percent from the May quarter and 4.7 percent in the year to August.

However, the number of full-time equivalent employees fell by 0.9 percent in the quarter, compared with a 1.7 percent increase in the May quarter. The "statistically significant" decrease was largely due to a 4.2 percent fall in employment in the manufacturing sector.

On an annual basis full time equivalent employees rose by 3.9 percent, compared with annual increases of 4.3 percent and 2.2 percent in the previous quarters.

Average hourly earnings were $17.91 in the private sector, and $23.60 in the public sector.

Male ordinary hourly earnings rose 2.0 percent in the quarter to $20.44, while women saw a smaller increase of 1.5 percent to $17.26, or 84.4 percent of their male equivalent.

Filled jobs -- totalling 1.52 million jobs -- rose annually by 3.7 percent.

The Labour Cost Index, also released today, showed salary and wage rates, including overtime, rose 0.7 percent from the June quarter to the September quarter.

That was also higher than the forecast 0.5 percent. On an annual basis, salary and wage rates were up 2.2 percent, compared with the expected 2.1 percent.

Private sector salary and wage rates rose 0.6 percent for the quarter, while the public sector saw a 0.8 percent rise.

The annual rise was the biggest since the May 1997 quarter.

The electricity, gas and water supply, and communication services industries saw the largest increase in their salary and wage rates.

The LCI measures changes in salary and wage rates for a fixed quantity and quality of labour input.

In contrast, the QES statistics show changes in pay rates, as well as compositional and other changes in the paid workforce.

Mr Drage picked the Reserve Bank to leave rates unchanged at 5.75 percent when it meets on November 20.

"From the Reserve Bank perspective it's likely to highlight the upside risks associated with a tight labour market, and the momentum we have in the domestic economy generally, which in the time being is likely to be an important offset to ongoing concerns about a tenuous international environment.

He expected Thursday's Household Labour Force Survey -- the official gauge of unemployment -- to show further moderate employment growth in the September quarter.

New Zealand's unemployment rate, currently at 5.1 percent, could slip below 5 percent, he said. That level was last seen 14 years ago.

Comments from our readers

No comments yet