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Recovery in unemployment and wages painfully slow

Recovery in unemployment and wages painfully slow

“Workers are missing out on a fair share in the economy as unemployment remains high and wages are stagnant”.

CTU Economist, Bill Rosenberg says “It is disappointing that unemployment is still at 6.0 percent, or 147,000 people, given the growing economy. We have the 5th highest GDP growth rate in the OECD but are 12th in unemployment despite having been hit much less hard by the Global Financial Crisis. New Zealand’s unemployment rate is in its 19th consecutive quarter that it has been higher than Australia’s – by far the longest run recorded, despite being lower than Australia’s for two-thirds of the time since 1986.”

“At this stage in the recovery, New Zealand’s unemployment rate should be much lower. We should be disappointed it isn’t below 5.0 percent rather than seeing it creep down at a glacial rate. Six years ago, before the crisis began, it was at 3.5 percent (December 2007), and government efforts should be focussing on getting it back to there.”

“A large part of the increase in employment is in part time work. The number of part time workers rose 7.0 percent over the year but the number of full-time workers rose only 4.2 percent. Total hours worked actually fell in the December quarter in seasonally adjusted terms, and underemployment – part-timers wanting more hours or to work full time – has risen steeply from 95,400 in December 2012 to 122,600 in December 2013. There are still 257,100 jobless, and although that has fallen over the last year it is still a large number of people looking for work.”

“We have yet to see the strong increases in wages the Minister of Finance said should be showing through,” says Rosenberg. He points out that the Labour Cost Index rose only 1.6 percent in the year, just keeping up with inflation, and rose less than the 1.8 percent a year before. Almost half of employees – 46 percent – did not receive a pay rise in the last year. For those that did get an increase, the amount they got fell – the median increase was 2.4 percent, down from 3.0 percent a year before. The average increase was 3.1 percent, down from 3.7 percent a year before.

The average hourly ordinary time wage rose only 0.2 percent in the December quarter after a strong rise in the previous quarter. “Even the 2.9 percent increase in the year is less than what is necessary to recognise growing productivity and cost of living, and a need for a catch-up after years of stagnation”, Rosenberg says. “It is still only 1.6 percent above what it was in December 2009 after correcting for CPI inflation. The LCI is actually 1.2 percent lower in real terms than it was at that time.”

The gender pay gap in average hourly ordinary time wages fell from 13.4 percent to 13.2 percent over the year, but is still higher than the 12.9 percent two years ago. The male rate is $29.85 and the female rate $25.92.

ENDS

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