3 Aug 2011

Gradual rise in wages predicted

7:16 am on 3 August 2011

Wages are expected to continue rising at a gradual pace over the next year, eventually recovering to pre-recession levels.

The Labour Cost Index shows wages rose 0.4% in the three months to June compared with the previous three months.

On an annual basis, wages increased 1.9%, with pay in the private sector rising more than in the public sector.

That's still less than the headline annual inflation rate, which is sitting at 5.3%, but Goldman Sachs' economist Philip Borkin says inflation doesn't appear to be putting undue pressure on pay.

He expects wages to continue rising over the next 12 months, but at a relatively gradual rate, and returning only levels in place prior to the recession.

Mr Borkin says a gradual rise in wages is in line with the Reserve Bank's expectations.

Economists are keenly awaiting the Household Labour Force Survey, which measures employment in the three months to June, to be released on Thursday.

Separately, the Quarterly Employment Survey shows the number of full-time employees remained flat, while total paid hours rose 1 point 6 percent in the June year.