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Private sector pay outgrows public sector

12 September 2012

Private sector pay outgrows public sector

Private sector employees covered by collective employment agreements received an average pay increase one percent higher than their counterparts in the public sector during the past 12 months, according to data collected by Victoria University’s Industrial Relations Centre.

Nationwide, workers on collectively-agreed employment contracts received an average two percent pay increase in the year to June 2012. Employees in the private sector received an average 2.6 percent pay rise and those in the public sector an average 1.5 percent pay rise.

In the only survey of its kind, data covering collective agreements was gathered from more than 300,000 workers on close to 2,000 agreements. Workers were surveyed on the duration, pay and conditions of their collective agreements.

Dr Stephen Blumenfeld, Director of the Industrial Relations Centre, says the annual survey delivers a stocktake of New Zealand’s collective employment contracts.

“This year’s survey showed that the proportion of New Zealand’s workforce on collective agreements remained steady, as it has for the last decade, with one in five workers covered by this type of agreement.”

“Public sector pay negotiations reflected the austerity approach taken by the current Government, and the survey also revealed that during the recession the average term of a collective employment agreement negotiated in New Zealand was pushed out to just shy of the three-year maximum specified in the Employment Relations Act.”

With private members bills to ‘Mondayise’ Waitangi and Anzac days and another to extend paid parental leave from 14 weeks to six months both passing their first reading in July, additional questions surveyed leave provisions in collective agreements.

New Zealand measured above the OECD average in terms of legislated paid leave from work—including statutory holidays and legislated annual leave.

“However, there is generally a lower level of additional annual leave negotiated through collective bargaining in New Zealand than in most other industrially developed countries,” says Dr Blumenfeld.

“Moreover, despite the enactment of paid parental leave in 2004, New Zealand remains at the lower end of the OECD league table for this measure. A majority of collectivised public sector employees, though, are entitled to receive some form of additional payment—commonly an ex-gratia payment on return to work—on top of any legislated entitlement to paid parental leave.”

Since the enactment of the Employment Contracts Act in 1991, Victoria’s Industrial Relations Centre has monitored the pay and conditions of employees covered by collective agreements. The results of this research were presented in a series of nationwide seminars throughout July and August.


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