Workers who don't receive salary bump face a 'virtual pay cut'
Tuesday, 26 July 2022
In the last three-and-half years of work, single mother of four, Dinah Peiata has not received a single pay increase.
Peiata works three jobs for a total of about 60 hours a week, as a security guard, a waitress and a nightclub bouncer.
But rising inflation has meant the cost of basic goods have far outstripped her wages, and she is struggling to keep up, she said.
“I work three jobs, so my wages should be able to cover my costs. But if I get paid on Wednesday, the next day that money has just disappeared,” Peiata said.
**READ MORE:
* Big pay rises not likely to follow NZ's jump in inflation, economists warn
* Workers have the most to lose from a wage-price spiral
**
Many workers were in a similar situation of having their wages fallen behind the three-decade record high inflation, a survey by Frog Recruitment found.
Nearly 1000 workers across a range of industries responded to the survey and 80% said they had not had a pay increase this year.
Of those who did receive a wage increase, 72% said the extra money did not cover the skyrocketing costs of petrol and food.
Stats NZ said that on average, wages increased 3% in the March quarter. Measured against 7.3% inflation, it meant there was a difference between wages and inflation of 4.3%.
Frog Recruitment managing director Shannon Barlow said this difference amounted to a “virtual paycut” for many workers.
Barlow said it was disappointing to see how many workers had not received a pay increase to match inflation.
“Wage increases seemed inevitable if businesses wanted to keep skilled talent.”
For workers, the reality of a “virtual paycut” has meant a lot more pain at the petrol pump and supermarket checkout. As the cost of living bit harder, more workers were going without, she said.
Over a quarter of respondents said they had had to make lifestyle changes to account for the lack of income. Half said they were stressed about the cost of living situation.
Workers who did not receive a pay rise had little choice but to look for other employment elsewhere, Barlow said.
“There is low unemployment and labour shortages across multiple industries, not to mention the lure of Australia. If businesses want to keep staff they will need to work harder to keep them,” she said.
The cost of losing staff in the current economic downturn could be far higher than the cost of increasing wages to match inflation, she said.
“There is no guarantee that a business will be able to find someone to replace staff in this environment. Employers need to think about all the training, the skills and the intellectual property that has gone into its workers, and all that will be lost if they leave.”
E Tu union industry coordinator Joe Gallagher said employers had long used the Covid-19 pandemic as an excuse to freeze wage increases, but now the “chickens were coming home to roost”.
“The disparity between living costs and wages is a major problem. We are seeing employers having to hike wages over 13% to get workers to a place where they can afford food,” Gallagher said.
A stark difference was emerging between employers that acknowledged workers needed a pay increase, and those that fought against a pay rise, he said.
“Those sectors that have relied on overseas workers for cheap labour are places that we have had to fight hard for increases. But some industries realise the need to increase wages to retain staff, and have been much easier to deal with.”
Employers that did not raise wages were in a “race to the bottom” of the labour market, he said.
“Where do you want to play in the labour market? If you don’t want to be at the very bottom, then you need to increase your wages.”