Wage Growth - JUNE 2011 Quarter - Archive
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Published: 2 August 2011
This note examines the wage growth measures from the Labour Cost Index (LCI) and the Quarterly Employment Survey (QES), which were released by Statistics New Zealand.
Wage growth is gradually recovering…
The June 2011 quarter data confirms that wage growth is gradually recovering, albeit from very low levels (Figure 1). The adjusted LCI (which measures changes in pay rates for a fixed set of jobs and excludes performance-related pay increases) rose by 0.4% over the June 2011 quarter, lifting annual wage growth to 1.9%. The latest annual wage growth is at the same level as was recorded for the year to March 2011, but is up from a 1.6% increase for the year to June 2010.
Figure 1: Wage Growth Measures
Source: LCI, QES, Statistics New Zealand
Annual wage growth in the public sector was 1.5% for the year to June 2011, following a 1.4% increase for the year to March 2011. Private sector wages increased by 2.0% for the year to June 2011, the same as for the year to March 2011. The two 2.0% increases were the highest since the September 2009 year.
By industry, annual wage growth was strongest in professional, scientific, and technical services (up 3.1%) and metal product manufacturing (up 2.8%). By occupation, annual wage growth was strongest in factory process workers (up 2.6%) and automotive and engineering trades workers (up 2.4%), partly due to new collective employment agreements coming into effect.
Annual wage growth in the QES1 was 3.1% for the year to June 2011, up from 2.6% for the year to March 2011 and a 16-year low of 1.1% for the year to June 2010 (Table 1). After four consecutive increases, the unadjusted LCI (which includes performance-related pay) eased slightly from 3.6% for the year to March 2011 to 3.4% for the year to June 2011.
| Wage Growth | Last year | Last quarter | This quarter |
|---|---|---|---|
| (annual % change) | June 2010 | March 2011 | June 2011 |
| Adjusted LCI | 1.6 | 1.9 | 1.9 |
| Unadjusted LCI | 2.9 | 3.6 | 3.4 |
| QES | 1.1 | 2.6 | 3.1 |
Source: LCI, QES, Statistics New Zealand.
… and is expected to recover further over the next two years
The latest results confirm that wage growth troughed in early 2010 and is now recovering. The domestic economic recovery has been stronger than expected and is expected to continue strengthening. The labour market has shown signs of increased labour demand and skilled labour has become harder to find. With a strengthening labour market, we expect wage pressures to increase and wage growth to continue to pick up over the next two years.
Author or contact details
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