Many workers effectively earning less as inflation outstrips wage increases
Monday, 18 October 2021
Many New Zealand workers are effectively earning less as wages fail to keep pace with rising inflation.
And those on the lowest incomes will be the hardest hit, the Council of Trade Unions says.
Stats NZ reported on Monday that annual inflation had jumped to 4.9 per cent in the September quarter, up from 3.3 per cent in the previous quarter.
However, incomes are growing more slowly, with the latest available data putting average wage inflation at 2.1 per cent.
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CTU economist and director of policy Craig Renney said the data showed the cost of living was rising faster than wage increases.
Those with the lowest incomes would need more help to avoid falling further behind, he said.
“Employers and the Government will have to take steps to make sure that the lowest paid workers are protected from these cost of living increases,” he said.
CTU analysis of the data showed inflation was concentrated in areas of spending that were most difficult to escape for households.
Housing and household utilities contributed the most to the overall annual inflation figures, rising by 6 per cent.
This was followed by transport, with prices rising 13 per cent driven by higher fuel prices. Food was the third fastest rising group, rising 3.1 per cent.
“These are items that all New Zealanders have to pay, meaning that inflation will be hitting those with the least ability to pay the hardest,” Renney said.
“These figures have not been driven by increases in wages. These figures have been driven by international factors such as the price of energy, and domestic factors such as the prices of rental properties and rates.
The figures also showed the need for continued increases to the minimum wage that genuinely reflected the cost of living for low-income New Zealanders, Renney said.
“They also demonstrate the need for Fair Pay Agreements that would protect workers from cost of living increases such as these.
“Many New Zealanders are facing a higher cost of living regardless of their choices. What is a choice is how we respond to this challenge.”