New Zealand wage growth 'worst in the world' - new report shows
New Zealanders have had some of the worst wage growth in the world in recent years, when adjusted for inflation.
The Organisation for Economic Co-operation and Development (OECD) released its latest employment outlook research on Tuesday, looking at disparities in jobs and incomes around the world. Australian commentators noted that Australia performed poorly - but this side of the Tasman fared even worse.
The data showed New Zealand had the worst wage growth after inflation over the past five years, of any OECD country.
"Despite persistent annual growth, in Q1 2026, real wages remained below their Q1 2021 levels in about one-third (13) of the 37 countries analysed," the report said.
"Real wages were more than 2% below Q1 2021 levels in a quarter of countries: Australia, Czechia, Denmark, Italy, New Zealand and Sweden. It should be noted that wage recovery is slowing down in most of these countries, with annual real wage growth in Q1 2026 being lower than a year earlier - wage growth accelerated only in Czechia and Sweden.
"Nevertheless, real wages have regained some of the lost ground in virtually all OECD countries - real wages are near the trough of the cost-of-living crisis only in New Zealand and Australia."
New Zealand's wages were 6.4% below 2021's in real terms.
It said the minimum wage had decreased year-on-year in April in 11 countries, including New Zealand, Australia, the US and Canada.
'Not quite as dire'
Economists said while the picture was grim, it may be being made to look worse by the data being used. It uses the labour cost index (LCI), which shows what employers are paying for certain roles.
Infometrics chief forecaster Gareth Kiernan said it was not the ideal measure for comparison.
"NZ's LCI adjusts for compositional changes in the workers surveyed so that, for example, the increased number of retail workers in the December quarter due to the Christmas rush doesn't drag down average labour costs, and also adjusts for changes in skill level, whereby someone might get a pay rise for being promoted from analyst to senior analyst.
"There's some evidence that the latter adjustments overcorrect, in as much as some of the pay rise associated with someone's job title changing from analyst to senior analyst could reasonably be viewed as part of their normal career progression and increase in experience.
"Stats NZ also publishes the unadjusted LCI, which maintains the first of the two adjustments noted above, but doesn't have the adjustments associated with changes in skill level."
He said the unadjusted LCI data could be a more accurate reflection. It showed no increase in wages when adjusted for inflation over the past year, and a fall of 0.1% since 2021.
"So still not great, but not quite as dire."
He said some of New Zealand's problems with wage growth were similar to those seen in Australia.
"We aren't very productive when we work, our real incomes end up reflecting that, and everything seems expensive. It's something that has been particularly problematic this decade, but boosting economic growth by higher migration as we did during the second half of last decade simply masked some of the underlying structural issues and economic problems we were facing, particularly poor productivity growth."
Westpac senior economist Michael Gordon said the OECD data on annual wages, rather than LCI, showed New Zealand wages in inflation-adjusted terms have risen by 2.6% over the last five years, "which was still fairly dismal but not much worse than the OECD average of 3%".
"Australia remains one of the worst performers with a 1.4% decline over five years."