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Wage Rates Growth Steady Despite Increase in Hours

Labour Cost Index and Quarterly Employment Survey: March 2000

Wage Rates Growth Steady Despite Increase in Hours and Jobs

Labour Cost Index and Quarterly Employment Survey figures, released together by Statistics New Zealand, show continued growth in paid hours and filled jobs have not yet led to an increase in wage inflation.

Salary and wage rates (including overtime), as measured by the Labour Cost Index, rose by 0.4 per cent in the March 2000 quarter and were 1.4 per cent higher than in the March 1999 quarter. The latest quarterly increase is in line with the average quarterly increase over the previous six quarters.

Eleven per cent of surveyed salary and ordinary time wage rates rose in the March 2000 quarter, compared with 11 per cent in the March 1999 quarter and 12 per cent in the March 1998 quarter. Of ordinary time rates that rose in the latest quarter, the average increase was 2.8 per cent. This was a little higher than in the previous two quarters (both 2.6 per cent), but still lower than the March 1999 quarter (3.2 per cent). It was well down from a peak of 4.0 per cent in the December 1996 quarter.

Public sector salary and ordinary time wage rates rose by 0.3 per cent this quarter. The private sector increase of 0.4 per cent was similar to recent quarters, indicating that economic growth in the second half of 1999 and recent increases in paid hours and filled jobs have not yet translated into a general pick up in wage inflation.

Results from the February 2000 Quarterly Employment Survey show that total paid hours and total filled jobs increased in the quarter by 2.8 per cent and 2.4 per cent respectively. This follows strong growth in paid hours and filled jobs in November 1999. The latest quarterly increase in total paid hours and filled jobs occurred mainly in industries that have lower average earnings. Those industries included manufacturing; construction; retail trade; and accommodation, cafes and restaurants.

Increases in total paid hours and filled jobs in lower paid industries contributed to average total hourly earnings remaining steady in February 2000 at $17.49, compared with $17.50 in November 1999. This represents a quarterly decrease of 1 cent or 0.1 per cent.

Private sector average ordinary time hourly earnings increased by 0.5 per cent between November 1999 and February 2000 and are now $16.54. In the year to February 2000, private sector average ordinary time hourly earnings increased by 1.5 per cent.

There has been relatively strong annual growth in paid hours for the construction industry since May 1999. In February 2000 total paid hours for construction were 10.1 per cent higher than in November 1999 and 12.0 per cent higher than in February 1999. The latest Labour Cost Index annual increase in salary and wage rates for construction (1.3 per cent higher than in the March 1999 quarter) is the largest since the September 1998 quarter. There have now been three quarterly increases in a row of 0.4 per cent, following four in a row of only 0.2 per cent.

As noted above, other industries showing recent growth in paid hours include retail trade; and accommodation, cafes and restaurants. This appears to be having an effect on pay rates, with a March 2000 quarter Labour Cost Index increase of 0.5 per cent in salary and wage rates for trade, restaurants and hotels being the highest quarterly rise for nearly three years.

Len Cook
GOVERNMENT STATISTICIAN
END

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