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Wage growth slower than inflation

Published: 11:43AM Tuesday August 03, 2010 Source: ONE News

Salaries and wages are growing slightly slower than the rate of inflation, Statistics New Zealand (SNZ) figures released today show.

Salary and wage rates, which include overtime, grew 1.6% in the year to the June 2010 quarter, after a 1.5% increase in the year to March.

For the same period to June, the Consumers Price Index (CPI), which tracks inflation, only rose 1.8%.

The annual labour cost index (LCI) wage growth had been declining, from a peak of 4.0% in the year to the September 2008 quarter, SNZ said.

Salary and wage rates increased for both the public sector (up 2.1%) and private sector (up 1.5%) during the year to the June 2010 quarter.

For the June quarter only, salary and wage rates rose 0.4% with the public sector up 0.2% while the private sector rose 0.5%.

The public sector rise was the lowest since a matching 0.2% rise in the June 1999 quarter.

The Quarterly Employment Survey (QES), also released today, showed that total paid hours increased 2.5% for the June 2010 year.

This was the first annual increase in total paid hours after six consecutive quarters of annual decline.

ASB Economist Jane Turner said today's figures were close to both the Reserve Bank's and market expectations.

"The data should increase the RBNZ's confidence a 'respectable' recovery is continuing to take place, with wage growth firming and employment demand growing," she said.

The figures also showed that average total hourly earnings increased 2.1% for the June 2010 year.

This followed an identical result in the year to March 2010, which had been the lowest annual increase since the December 2004 year.

The LCI tracks nearly 6,000 positions and measures changes in pay rates for a fixed quantity and quality of labour.

The QES is designed to measure quarterly estimates of change in, and levels of, average hourly and average weekly (pre-tax) earnings, average weekly paid hours, and the number of filled jobs.

QES statistics are derived quarterly from approximately 18,000 surveyed business locations in a range of industries and regions throughout New Zealand.