Kiwi workers in hot seat as unemployment down, wages up

Tuesday, 6 August 2019

New Zealand workers have had their biggest payrise in 10 years, new data shows.

Stats NZ has released its latest labour market data, which shows average hourly earnings increased 4 per cent over the past year to $32.37 an hour. That is the largest year-on-year percentage increase since June 2009.

The minimum wage will continue to rise in annual increments, reaching $20 an hour by 2021. Private sector salary and wage rates rose 0.8 per cent for the June 2019 quarter, following a rise of 0.3 per cent in the March 2019 quarter.

The impact of the minimum wage change on industry groups was most significant in retail trade (up 1.4 per cent), and accommodation and food services (up 2.3 per cent) for the June 2019 quarter.

* Unemployment climbs from nine-year low, sparking fresh political debate over the economy

* New Zealand unemployment rate falls to the lowest level in nearly a decade**

At the same time, the seasonally adjusted unemployment rate fell to 3.9 per cent in the June quarter, down from 4.2 per cent the previous quarter.

It is the lowest unemployment rate since the June 2008 quarter, when it was 3.8 per cent.

Motueka teachers picketing during the 'Mega-Strike' this year. Teachers finalised a collective agreement in June.

Have you had a pay rise? Or got a new job? Email rebecca.stevenson@stuff.co.nz

'Since late 2012, the seasonally adjusted unemployment rate has largely been tracking down, towards levels seen before the global financial crisis in 2008,' labour market and household statistics senior manager Sean Broughton said.

The underutilisation rate also fell to 11 per cent, from 11.3 per cent the previous quarter. This includes people who are unemployed, employed part-time but would like more work, those who want a job but aren't actively looking for one and people who can't start work yet but are looking for work.

Excluding the 'unemployed' measure, under-employment increased.

The rate of underutilised women fell while the men's rate increased.

Gareth Kiernan, chief forecaster at Infometrics, said the Government's programme of minimum wage hikes was pushing up labour cost inflation to the highest rate in a decade.

But the minimum wage increase to $17.70 an hour would not necessarily mean higher wages for all, he said.

'There is likely to be some flow-on for workers just above the minimum wage as employers are forced to try and maintain a premium between new employees and people who have built up some experience.

'Apart from that, however, we would expect flow-on effects to be limited by softening in the labour market over the last six months which is likely to persist for the next 12 to 18 months and the profitability squeeze being felt by businesses that will limit their ability or willingness to put up wages.'

But ASB chief economist Nick Tuffley said there had been some wider effect.

'The 7.3 per cent lift in the minimum wage in April was a prominent feature of the wages data, as had been expected. This was on display in the disaggregated data, with the retail trade and accommodation industry outperforming with a 1.8 per cent increase lift in wages over the quarter. Solid quarterly increases outside of this sector were relatively broad-based, indicating there was some broader spillover from the minimum wage hike.'

Along with the rise in minimum wage this quarter, collective agreements in healthcare occupations, including nurses, contributed to higher annual wage rates. Collective pay agreements for primary and secondary teachers were also finalised in late June.

Tuffley said the chance of a worker getting a payrise were 'better than even'.

'The Labour Cost Index shows that nearly 60 per cent of people received an increase. The chances are likely to be better for lower-income earners who are paid near the minimum wage…However, we are still in an environment of low wage increases, so increases are likely to be modest outside of the impact of minimum wage increases.'