|Wages & Employment Up
Unlike their cousins across the Tasman, New
Zealand workers have seen strong wage growth, with the biggest pay rise in a
decade recently recorded. According to Statistics New Zealand, average hourly
earnings have increased 4% over the past year to $32.37 an hour, which is the
biggest annual percentage increase since June 2009. The seasonally adjusted
unemployment rate also fell in the June quarter from 4.2% to 3.9%, with the
under-utilisation rate also dropping from 11.3% to 11%.
Despite reasonably strong wage and
employment figures, only 60% of people experienced an increase according to The
Labour Cost Index. Low-income earners are more likely to see a jump in wages,
with the minimum wage recently increased to $17.70 an hour. The minimum wage
will keep rising in small increments until 2021, until it reaches the magic
politically beneficial number of $20 an hour. The minimum wage increase was not
felt across the board, with retail and accommodation and food services feeling
the most impact at 1.4% and 2.3% respectively.
According to ASB chief economist Nick
Tuffley, low-income earners are more likely to benefit from wage growth over
recent months: "The chances are likely to be better for lower-income
earners who are paid near the minimum wage... 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."
Despite a significant jump in the minimum
hourly rate, wage growth was more subdued for higher-income earners. According
to Mr Tuffley, "Solid quarterly increases outside of this sector were
relatively broad-based, indicating there was some broader spillover from the
minimum wage hike... 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."
The unemployment rate was also down, with
the number of people looking for work at its lowest level since June 2008 when
it was at 3.8%. According to Sean Broughton, labour market and household
statistics senior manager, "Since late 2012, the seasonally adjusted
unemployment rate has largely been tracking down, towards levels seen before
the global financial crisis in 2008." While the under-utilisation rate was
down; which includes people who are unemployed, people who are employed
part-time but would like more work, and people who are not actively looking for
a job; the under-employment rate was up.
Along with rising average wage growth and a
significant jump in the minimum hourly rate this quarter, many New Zealand
workers also benefited from new collective agreements. The healthcare sector
was positively affected, with nurses and other healthcare professionals
contributing strongly to higher annual wage growth. Collective pay agreements
for primary and secondary school teachers were also finalised in late June,
with these increases likely to contribute to positive wage growth next quarter.