7 May 2007

Wellington Businesses face Wage Competition from Government Departments

Today’s labour market data showing continued pressure on wages rings true for Wellington businesses facing competition from government departments, according to the Wellington Regional Chamber of Commerce.

The Quarterly Employment Survey and Labour Cost Index showed that while wage inflation looks to have peaked, the labour market remains relatively tight.

“This is consistent with the Chamber’s latest survey of business confidence which shows that employers are finding it harder to attract staff. Staff recruitment and retention were also listed as key concerns faced by businesses”, said Chamber CEO Charles Finny.

“Competition for employees from the public sector is an ongoing issue for Wellington-based private sector businesses. Not only are employees hard to find, but businesses are having to pay more to match high paying government departments.

“The Wellington region has the highest incomes in the country partly due to its high concentration of public sector employees. Today’s QES figures show that average hourly earnings were $25.26 in Wellington, compared with $23.65 in Auckland and $21.60 in Canterbury.

“While today’s figures show that public and private sector wage growth rates are starting to even out, the public sector has lead the way in driving up the wage rates in recent years.

“The Chamber welcomes the narrowing of this wage growth gap between the public and private sectors but we remain concerned that Wellington’s large number of high quality, well-paid people in the government sector can also be seen as a misallocation of resources. Notwithstanding the important contribution they make to a highly regarded public service, we would like to see more of these people employed in the private sector generating real wealth or else the government sector becoming more focussed on creating real wealth by exporting its high quality services and intellectual property to the rest of New Zealand and the world.

“The QES shows that public sector hourly wages (a broad, nation-wide measure of public employees) were higher than the private sector, $28.99 compared with $21.11.

Today’s data follows recent government figures showing wages in the public sector increased $420 million in the year to February – a mix of new jobs and higher wages.”

ENDS

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