8 Aug 2012

Pace of wage and salary growth still subdued

9:00 am on 8 August 2012

Economists say the pace of wage and salary growth has remained subdued, but the employment market has picked up.

Official figures show the labour cost index of private wages rose 0.5% in the three months to June, compared with the previous quarter. On an annual basis, wages rose 2.1%.

Overall, about 56% of workers in general got a pay rise, with a median pay rise of 3%. The average rise for the public sector, however, was only 1.6% - because of the squeeze on government spending.

ANZ New Zealand senior economist Mark Smith says pay rises have not been uniform and more pressure for wage rises is starting to come through from the more tradeable parts of the economy.

ASB economist Jane Turner says the figures - which are closely watched by the Reserve Bank for signs of wage inflation - remain contained.

On a sectoral basis, agriculture, fishing, mining and pockets of manufacturing experienced above-average wage increases, while construction remains subdued and retail is weak.

Separately, the quarterly employment survey has found that adjusted filled jobs rose a stronger-than-expected 0.7%, with a rise in full-time employment offsetting a fall in part-time jobs.

Paid hours rebounded 2.1% after a fall of 0.5% in the previous quarter.

Ms Turner says this indicates the recovery in job creation will continue when the household labour force survey figures come out on Thursday.

Mr Smith observes, however, that the quarterly employment survey is more volatile than the household labour force survey.