Employment, earnings and income statistics from leed

Published: 12 December 2007

Purpose

This note summarises the findings from the latest release of annual, person-level statistics from the Linked Employer-Employee Dataset (LEED), which were released by Statistics New Zealand on Friday 30 November. The person-level statistics provide particular insights on the transitions of people between jobs and income levels.

Executive summary

The LEED statistics show earnings disparities between men and women and also shed light on the different patterns of movement between earnings groups. Between 2001 and 2006¹, women were much more likely than men to move to a lower earnings group. Most of this movement is likely to be due to women reducing their hours of work or only being employed for part of the year, rather than moving to lower paid jobs.

In 2006, an average² of 5.0% of workers held two or more jobs. Women were twice as likely as men to hold multiple jobs.

The business and property services industry has overtaken the manufacturing industry as New Zealand’s largest employer. There was a small decrease in the number of people employed in the agriculture, forestry and fishing industry but this masked some larger changes. A moderate increase in the number of wage and salary earners in agriculture, forestry and fishing was offset by a large fall in the number of self-employed, predominantly in dairy farming.

Strong employment growth between 2001 and 2006 was overwhelmingly driven by increases in the number of wage and salary earners with only a very small increase occurring in the number of self-employed.

Background

LEED is an ongoing set of official statistics created by linking Inland Revenue Department tax data on employees and the self-employed to employer data from Statistics NZ’s Business Frame.

On Friday 30 November, Statistics NZ released the second official series of person-level statistics from LEED. These include statistics on income and earnings transitions, job tenure, multiple job-holding and the self-employed.

LEED does not contain any information on ethnicity, occupation or qualifications. LEED data also does not distinguish jobs by full or part-time status.

In the annual LEED statistics, the term “employed” refers to people whose main source of income during the year was either wages and salaries or self-employment. For this reason, the number of people employed is not directly comparable to other data sources such as the Household Labour Force Survey.

Comment

Earnings distribution

Figure 1 shows that in 2006 women were over-represented in the bottom five earnings deciles and this reversed as earnings increased. Around three-quarters of the people in the top earnings decile were men. However, median earnings for women grew by 24.1% between 2001 and 2006, compared with 19.9% for men.

Figure 1:  Annual earnings distribution by sex (2006)

Data table for Fig 1

Earnings mobility – distinct patterns by age and sex

The longitudinal nature of LEED allows the comparison of people’s annual earnings between two periods of time. However, the data does not distinguish part-time from full-time earners, and those who were employed for the full year from those employed for only part of the year. Forty percent of earners received less than $20,471 (which is slightly above the equivalent full-time earnings of a person on the minimum adult wage in the 2006 tax year), suggesting that a large proportion of earners are not full-time, full-year workers.

There is considerable mobility between earnings deciles. Between 2001 and 2006, younger workers tended to be more upwardly mobile³ than older workers, while men tend to be more upwardly mobile in their earnings patterns than women. However, it is not possible to distinguish the effects of people moving to higher paid jobs from people’s earnings increasing as they increase their hours of work or work for a greater part of the year.

Between 2001 and 2006, women were more likely than men to be downwardly mobile. In every earnings decile and for every age group except for those 65 and over, women were more likely to have moved to a lower earnings decile than men.

Multiple job-holding

During the March 2006 year, an average of 5.0% of wage and salary earners had two or more jobs. This meant that 9.5% of all jobs were held by multiple job holders. Different industries had different rates of multiple job holding. Accommodation, cafes and restaurants had the highest proportion of jobs being held by multiple job holders at 16.1% and the electricity, gas and water supply industry the lowest at 3.4%.

Women were twice as likely to hold multiple jobs as men, but they tended to earn less for each job regardless of how many jobs they held.

Patterns of employment growth

The number of employed people grew by 17.2% between the 2001 and 2006 tax years. Auckland was the main driver of this growth with a 21.3% increase, although in percentage terms Tasman had the highest rate of growth at 25.5%. The only region with employment growth lower than 12% was Southland at 5.1%.

Over this period, self employment grew by 1.7% while wage and salary earners grew by 21.0%. The very slow growth in self-employment was driven by a large fall in self-employment in the agriculture, forestry and fishing industry - particularly in dairy cattle farming.

Figure 2: Change in employment by industry and employment type (2001-2006)


Data table for Fig 2

Strong employment growth in the property and business services industry, coupled with slower growth in manufacturing, led to property and business services overtaking manufacturing as the largest employer in New Zealand. However, the construction industry was New Zealand’s fastest growing employer. The number of people employed in construction grew by 41.4% between 2001 and 2006, almost two and a half times the national average rate of growth. This growth was driven by demand created by the building construction boom, and most of it was from owner-run businesses.

At the other end of the scale there was considerable change in the agriculture, forestry and fishing industry. Growth in wage and salary earners in this industry was in line with the average for other industries, but there was a large fall in self-employment leading to a small overall decline in employment in this industry. Almost two-thirds of the growth in wage and salary earners was in services to agriculture. The decline in self-employment was more widely spread but almost half occurred in dairy cattle farming. Both these trends were in line with the decreasing number of small businesses in the agriculture, forestry and fishing industry.

Endnotes

1 Tax year to March 2006.

2 The number of multiple job holders is based on the quarterly average number of people holding two or more jobs on the 15th day of the middle month of each quarter. Multiple job holding figures are not available for the self-employed.

3 Workers who were upwardly mobile were in a higher earnings decile in 2006 than they had been in 2001.

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