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Growth in Wage Rates Remains Steady - Stats NZ

Labour Cost Index - Salary and Wage Rates: December 1999 quarter

Labour Cost Index figures released today show that salary and wage rates (including overtime) rose by 0.4 per cent in the December 1999 quarter and were 1.4 per cent higher than a year earlier. The latest quarterly increase is in line with the average quarterly increase over the previous five quarters. This indicates that recent increases in employment and decreases in the unemployment rate have not led to a general pickup in wage growth so far.

Overtime wage rates rose by 0.3 per cent in the latest quarter, but were unchanged from a year earlier. Salary and ordinary time wage rates rose by 0.4 per cent in the December 1999 quarter and were 1.5 per cent higher than a year earlier.

Private sector pay rates rose by 0.4 per cent this quarter while the public sector increase, boosted by an increase in primary school teachers' salaries, was 0.6 per cent. On an annual basis, pay rates increased by 1.5 per cent in the private sector and by 1.7 per cent in the public sector.

Among the nine major occupation groups, technicians and associate professionals recorded the highest annual increase this quarter, with their pay rates being 2.1 per cent higher than in the December 1998 quarter. Service and sales workers (up 0.8 per cent) continue to record the lowest annual movement. Latest industry group annual increases ranged from 0.4 per cent for wood and wood products to 2.4 per cent for insurance and financing.

The proportion of surveyed salary and ordinary time wage rates which had annual increases in excess of 5 per cent remained at 6 per cent this quarter, the same proportion as for the previous two quarters and the lowest level since the June 1995 quarter. The proportion of pay rates having annual increases of up to 2 per cent rose from 19 per cent in the September 1999 quarter to 20 per cent in the latest quarter. The proportion that did not change was 55 per cent.

The median increase of surveyed salary and ordinary time wage rates that rose from the December 1998 quarter to the December 1999 quarter was 2.1 per cent. The average increase for the same period was 3.1 per cent. These increases are at their lowest levels since the March 1995 quarter and compare with median and average annual increases of 2.5 per cent and 3.6 per cent, respectively, for the December 1998 quarter.

Latest Quarterly Employment Survey average earnings figures were released last week. Average ordinary time hourly earnings fell by 0.4 per cent from August to November 1999, compared with a Labour Cost Index increase for salary and ordinary time wage rates of 0.4 per cent. The Labour Cost Index is a price index which has fixed industry and occupation weights. It measures changes in pay rates for a fixed quality and quantity of work. By comparison, movements in the Quarterly Employment Survey (QES) average earnings measures reflect not only wage rate changes, but also compositional change such as change in the proportions of employees and paid hours in different industries and in different occupations.

After adjusting for changes in quality, 12 per cent of ordinary time salary and wage rates in the Labour Cost Survey rose in the December 1999 quarter and 88 per cent remained unchanged. Only a very small number fell, suggesting that the QES decrease of 0.4 per cent was strongly influenced by compositional change such as a relative increase in the paid hours of people earning lower-than-average rates of pay.

Ian Ewing


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