Wages need to rise faster

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Source: CTU – Press Release/Statement:

Headline: Wages need to rise faster

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“Wage rises are disappointingly slow given the economy now appears to be growing”, says CTU Economist Bill Rosenberg. “It is good to see wages rising faster than prices, but labour productivity growth is strong given slow growth in hours worked but a faster increase in GDP, yet this is not showing up enough in wages.” Average hourly earnings, which should reflect productivity growth, were up only 2.1 percent for the year or about 1.2 percent in real terms.

“Wages need to rise significantly if we are to keep people in New Zealand, close the gap with Australia and encourage them to use their skills in this country”, Rosenberg says. “We should be encouraging good wage growth both to regain living standards and to increase demand for goods and services in our economy. It is good to see companies like the Warehouse recognising the need for higher wages and moving to adopt the Living Wage.”

The labour cost index rose only 1.7 percent in the year, and the median increase for those who got a wage increase in the last year was 2.9 percent, one of the lowest  in the last decade, and back where it was in 2010/2011. In the last year 44 percent of employees did not receive an increase in their pay to reflect the cost of living or to retain staff.

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Job growth measured by the Quarterly Employment Survey continues to be slow with only a 0.4 percent increase in jobs (both in numbers and full-time equivalents) the last three months in seasonally adjusted terms – the same as the disappointing result in the December quarter – and zero increase in hours worked.

The gender pay gap at 13.2 percent for the average ordinary time wage remains higher than the 12.9 percent it was a year ago.