CTU MEDIA RELEASE
05 February 2008
Wages catch up needed
“The labour market has been tight for 6 years – yet wage growth has been modest to say the least in that period,” CTU Economist Peter Conway said today in response to latest wage figures from Statistics New Zealand.
“Statistics released today show that the pace of wage increase is unchanged from a year ago. Wages were up by 3.3% in 2007 compared with 3.2 percent for 2006. For those workers that got a wage increase, the median increase of 4 percent for 2007 is less than the 4.2 percent recorded for 2006 while the average increase last year of 5.6 percent is similar to the 5.5 percent level in 2006.” Peter Conway said that some commentators focus on the unadjusted wage index which showed a 5 percent increase. However this is lower than increases from mid-2005 to late 2006.
“Annual inflation is at 3.2 percent and workers are facing significant cost pressures as food and groceries rose by 7.8 percent last year and petrol by 17 percent. House prices were up by 10 percent and many will face a rollover of fixed mortgage interest rates from around 7 percent to about 9.5 percent this year”.
Peter Conway said that we need wages to rise to attract and retain workers and this level of increase will not add significantly to inflation pressures caused by food and petrol price rises. Lifts in productivity and a higher level of income going into savings through KiwiSaver mean that wage increases of around 5 percent in today’s figures are not only good for workers but are affordable and should not affect the official cash rate. Statistics NZ have noted today that the reasons given for increases in many cases were collective employment agreements coming into effect and the cost of living. Unions will continue to advocate for more widespread collective bargaining alongside a lift in the minimum wage and ongoing investment in skills, infrastructure and modernising work practices.