CTU Media Release
7 August 2012
LCI shows wages barely keeping up with inflation
Today’s 0.5 percent increase in the Labour Cost Index in the three months to June means that wages and salaries are no further ahead compared to inflation than they were six months ago, and 2.5 percent behind where they were in March 2009.
Yet in Australia, the comparable Wage Price Index shows Australian wage and salary earners are 1.7 percent ahead compared to inflation in the six months to March, and 2.5 percent ahead of where they were in March 2009.
Bill Rosenberg, CTU Economist says “this means a further widening of the wage gap between New Zealand and Australia”.
“Inflation is low, and wages certainly aren’t pushing up prices. But the economy is going nowhere with unemployment remaining high and at current settings likely to remain there for a long time. More spending power in working people’s pockets might be just the thing to stimulate activity in the economy. If they were buying more New Zealand made goods and services, firms would be able to employ more people.”
“Most union members on collective employment agreements are getting increases in their pay rates, though there is a big range in the size of the increases. In the EPMU, the largest private sector union, for example the big Metals multi-employer collective agreement covering over 1000 workers in over 100 engineering and manufacturing firms, has been settled at a 2.8 percent increase in the first year, guaranteeing all those workers that rise. Progressive supermarket employees in FIRST union are in their second year of a 5 percent annual increase.”
“Many state sector employees are getting much less – often between 1 and 2 percent – because of the government’s actions in suppressing pay increases, meaning many have fallen behind the increased cost of living. The LCI for the public sector rose only 0.3 percent in the June quarter compared to 0.5 percent for the private sector.”
“However the LCI statistics show that only 56 percent of workers in general received a rise to address the cost of living or market relativities in the last year,” said Bill Rosenberg.