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Labour Cost Index (Salary and Wage Rates) - June Q

Labour Cost Index (Salary and Wage Rates) - June 1999 quarter

Lower Growth in Wage Rates

The annual growth in salary and wage rates (including overtime) has continued to fall. Annual pay increases have fallen, said Deputy Government Statistician Ian Ewing, from a 2.5 per cent rise in the year to June 1997, to 2.0 per cent in the year to June 1998, down to 1.4 per cent in the year to June 1999.

Salary and wage rates in the June 1999 quarter were 0.3 per cent higher than in the March 1999 quarter. This followed three consecutive quarterly increases of 0.4 per cent.

In the private sector, salary and wage rates rose by 1.6 per cent from the June 1998 quarter to the June 1999 quarter. The public sector increase for the same period was 1.2 per cent.

From the June 1998 quarter to the June 1999 quarter, pay rates across industry groups ranged from no change for transport and storage to 2.6 per cent for insurance and financing. There was a 1.5 per cent increase for manufacturing, an industry which has recently experienced declining levels of capital investment, falling sales and falling employment. Employment numbers have also declined in the construction industry which recorded an annual pay increase of 0.7 per cent.

The proportion of surveyed salary and wage rates which received annual increases in excess of 5 per cent has nearly halved in the past two years and the proportion that did not increase at all has grown from 47 percent in June 1997 to 53 percent in June 1998 and to 58 percent in the June 1999 quarter.

The median increase of surveyed salary and ordinary time wage rates which rose from the June 1998 to the June 1999 quarter was 2.4 per cent and the average increase was 3.4 per cent. These compare with annual increases of 2.9 and 4.0 per cent, respectively, for the June 1998 quarter. The recent lower annual pay increases coincide with slow growth in employment and low levels of consumer and producer price inflation.

Ian Ewing
23 August 1999

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