Declining Non-wage Labour Costs

Labour Cost Index (All Labour Costs) - December 1998 quarter and March 1999 quarter

Declining Non-wage Labour Costs

Each of the surveyed non-wage labour costs fell from the March 1998 quarter to the March 1999 quarter, said Deputy Government Statistician Ian Ewing. The overall decrease in non-wage labour costs for that period was 3.3 per cent.

The employer cost of superannuation and accident compensation premiums made the largest contributions to the 3.3 per cent drop in costs from the March 1998 quarter. Compared with a year earlier, superannuation costs were 8.2 per cent lower due to sizeable reductions in the employer contribution rates for public sector employees and the employer cost of ACC was 6.9 per cent lower caused by premium decreases last year for the majority of industries.

Compared with the March 1998 quarter, total labour costs were 0.9 per cent higher for the March 1999 quarter. The increase in salary and wage rates of 1.7 per cent from the March 1998 quarter to the March 1999 quarter was partially offset by falls for each of the surveyed non-wage labour costs.

The other non-wage labour costs index, including medical insurance, motor vehicles available for private use and employment-related low interest loans, fell by 5.1 per cent from the September 1998 quarter to the December 1998 quarter, and it decreased a further 0.9 per cent for the March 1999 quarter. The various factors driving down these costs in recent quarters include falling vehicle prices, the removal of the last remaining vehicle import tariff, lower medical insurance premiums as a result of fewer claims being lodged and decreases in the prescribed interest rate which is used to calculate the fringe benefit value of low interest loans.

Whilst total labour costs increased by 0.9 per cent between the March 1998 and March 1999 quarters, the costs of other business inputs as measured by the Producers Price Index fell by 0.2 per cent, over the same period, and consumer prices fell by 0.1 per cent.

Ian Ewing
DEPUTY GOVERNMENT STATISTICIAN
30 August 1999

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