5 Feb 2015

Wages lag productivity gains

2:01 pm on 5 February 2015

A study has found workers are missing out on more pay despite firms becoming more productive.

A study by the Productivity Commission found labour's share of total income has declined since the late 1970s, while real wages have not kept up with productivity gains.

One of the authors of the study, Paul Conway, said New Zealand's experience mirrors that of other developed countries.

He said productivity growth had been running ahead of growth in the real wages that firms pay their workers.

"It's often put down to the impact of new technologies, the impact of ongoing globalisation and falls in worker bargaining power," he said.

Mr Conway said labour's share of total income fell from about 65 percent in 1978 to 57 percent by 2010.

But he points out the study also shows the real wages paid to workers grows more rapidly when productivity growth is strong.

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