Growth in Wage Rates Continues

Quarterly Employment Survey and Labour Cost Index: August 2001 quarter

Growth in Wage Rates Continues

Figures released today from Statistics New Zealand's Labour Cost Index (LCI) and Quarterly Employment Survey (QES) show evidence of further wage growth in the September 2001 quarter.

Salary and wage rates (including overtime), as measured by the LCI, increased by 0.6 per cent in the September 2001 quarter, following increases of 0.4 per cent in the June 2001 quarter and 0.5 per cent in the March 2001 quarter.

On an annual basis, salary and wage rates (including overtime) were 2.0 per cent higher in the September 2001 quarter than in the September 2000 quarter.

LCI private sector salary and ordinary time wage rates rose by 0.5 per cent in the September 2001 quarter and are now 2.0 per cent higher than a year earlier. This is the highest annual increase since the December 1997 quarter when an increase of 2.2 per cent was recorded. Forty-nine per cent of private sector ordinary time pay rates increased from the September 2000 quarter, which is the highest proportion in more than three years. Of the private sector ordinary time pay rates that rose from the September 2000 quarter to the September 2001 quarter, the average annual increase was 4.2 per cent (the highest level for over three years).

LCI public sector salary and ordinary time wage rates rose by 0.6 per cent in the September 2001 quarter. This follows an increase of 0.3 per cent in the June 2001 quarter. On an annual basis public sector salary and ordinary time wage rates were 1.9 per cent higher than in the September 2000 quarter.

Survey respondents reported that one in three increases in ordinary time pay rates during the past year was to match market rates, retain staff or attract staff. However, three in five pay rate increases of more than 5 per cent were for these reasons, compared with one in five for increases of up to 2 per cent. Annual increases of more than 5 per cent have become more common. One in 10 pay rates increased by this amount in the year to September 2001, the highest proportion in over three years.

The LCI measures changes in salary and wage rates for a fixed quantity and quality of labour input. By comparison, QES average earnings statistics reflect not only changes in pay rates, but also compositional and other changes in the workforce.

Results from the August 2001 QES show little movement in employment, with full-time equivalent employees (FTEs) falling by 0.5 per cent in the August 2001 quarter. Seasonally adjusted total paid hours and gross earnings increased by 0.3 per cent and 1.0 per cent respectively. Annually, seasonally adjusted total paid hours increased by 2.7 per cent, and seasonally adjusted gross earnings by 6.2 per cent.

Average total hourly earnings, as measured by the QES, show an upward trend as in recent quarters. For the August 2001 quarter, average total hourly earnings increased by 1.1 per cent to $18.48. This brings the annual movement in average total hourly earnings to 3.4 per cent in the year to August 2001. An annual movement of this magnitude has not been seen since August 1997, when it was 3.7 per cent.

For the August 2001 quarter, QES private sector average ordinary time hourly earnings were $17.38, a quarterly increase of 0.8 per cent. In the year to August 2001, private sector average ordinary time hourly earnings increased by 3.4 per cent.

Brian Pink Government Statistician END

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