NZ wages fell in real terms in 2002

By NZPA

Wednesday 5th February 2003

Wages grew just 2.1 percent in 2002 compared with the inflation rate of 2.6 percent, according to Statistics New Zealand's quarterly wage survey released today.

The Labour Cost Index of salary and wage rates showed a rise of 0.5 percent in the December quarter for all sectors. Private sector wages rose 0.6 percent in the quarter for an annual 2.1 percent rise, while public sector rates rose 0.8 percent in the quarter for an annual rise of 2.8 percent.

The rises were in line with economists' forecasts, and with little wage pressure evident despite strong employment and employment growth, there will be more pressure on the Reserve Bank to cut interest rates.

Public sector rates rose sharply in the second half of 2002 with a 0.8 percent rise in the September quarter as well.

Within the public sector, health professionals received a 3.2 percent annual increase while teachers wages rose 2.8 percent.

Private sector pay including overtime was only up 2.0 percent in 2002 compared with a 2.1 percent in 2001.

Workers in the construction industry were best off with a 2.3 percent rise in 2002, including hikes of 0.8 percent in each of the last two quarters.

Survey respondents reported that one in three increases in ordinary time pay rates during the past year was to match market rates, retain staff or attract staff. Three in five pay rate increases of more than 5 percent were for these reasons, compared with one in five for increases of up to 2 percent.

The quarterly employment survey (QES) released at the same time showed the labour market remains buoyant.

The number of full-time equivalent jobs increased by 2.4 percent in the November (correct) quarter, up from a 0.9 percent rise in the August quarter and a 1.7 percent rise in the May quarter.

Statistics NZ said the increase could be attributed to a seasonal increase in employment in manufacturing, retailing, and accommodation, cafes and restaurants.

On an annual basis, the number of full-time equivalent jobs rose by 3.6 percent.

In the November quarter the number of full-time jobs created was 23,000 (up 2.4 percent) while part-time jobs rose by 10,700 (2.3 percent).

There were nearly 10,000 new jobs created in manufacturing in the quarter. Historically, manufacturing is strong in the November quarter.

The QES survey, which also measures wages rates, showed total hourly earnings rose 0.7 percent in the November quarter to $19.19. On an annual basis, they were up 3.6 percent.

This measure is influenced not only by rates and hours worked but also by compositional changes in the paid work force.

Average earnings for males increased 0.8 percent in the quarter to $20.60 while for females, they rose 0.5 percent to $17.35.

Average total gross weekly earnings rose to $735.76 compared with $708.50 a year earlier.

SNZ's Chris Pike said that people's remuneration was improving because they were moving up in their jobs or working longer hours.

If they were simply working in the same job doing the same hours, then they were worse off when inflation was taken into account.

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