Low wage rises overtaken by inflation

The rise in the Labour Cost Index of 1.9 percent in the year to June shows wages are still falling behind inflation of 5.3 percent says Bill Rosenberg, CTU Economist, and even behind price rises other than the GST increase. Public sector rates are even further behind, rising only 1.5 percent in the year compared to 2.0 percent in the private sector.

"This will make people more determined to ensure their wages do not fall in value. While there is a welcome increase in the number who have had increases during the year (rising from 56 percent to 58 percent), with a median of 2.9 percent, most have had increases less than inflation, and many people (42 percent) have not had wage increases at all during the year," said Rosenberg.

"We note that some of those who got the highest increase - Factory process workers, and Automotive and engineering trades workers - the main reason for the increase was collective employment agreements coming into effect. Collective agreements are consistently one of the most important reasons (combined with cost of living and keeping up with market rates) for pay rises. This underlines the importance of collective agreements negotiated by unions in ensuring wages do rise as the economy improves."

The gender pay gap in the average wage is 13 percent.

"Interest rates are beginning to rise again, on top of dairy, petrol and other price rises. For most people, their wages are not keeping up with costs. This is in a situation where GDP and Gross National Disposable Income have both risen per person in real terms, and the richest people in New Zealand are seeing increases in their wealth of around 20 percent. There are big issues of fairness in our wages system that are not being addressed," said Rosenberg.

ENDS

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