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Pay still falling behind cost increases
21 October 2011
Pay still falling behind cost increases
The 2.4 percent increase in the index of labour costs, is still far below cost rises which rose 5.3 percent over the same period. Even without the 20 percent increase in GST, costs rose faster at 3.3 percent, says CTU Economist, Bill Rosenberg.
This is shown in today’s release by Statistics New Zealand of the All Labour Costs series of the Labour Cost Index.
“This shows again that the low wages in this country are heading lower, and it is clear that we need to do something about it. The current employment relations system has not responded to the need for higher wage rates and needs to change. Lifting the minimum wage is only one part of it. Ensuring that workers get a fair share of productivity increases in their wages is another. Policies like that announced earlier this week to spread the benefits of collective bargaining are very important in achieving this.”
The salaries and wages part of the index, which was released in August rose only 1.9 percent. The non-wage part of labour costs cover mainly leave, employer contributions to employees’ superannuation, and ACC levies. These costs rose 4.9 percent, mainly because more employees are contributing to superannuation and they took more leave in the year to June. “This appears to be a catch-up from the previous year, when the cost of employees’ leave actually fell”, says Rosenberg.
Rosenberg welcomed the signs that more people were taking up employer-subsidised superannuation, shown by an increase of 11.3 percent in employer contributions. However this increase was largely before the government announced cuts to KiwiSaver incentives. “There may well be a different picture next year,” he said.
However the biggest rise was in ACC levies paid by employers which rose by 27.5 percent. “The huge rise has proved to have been quite unnecessary, and part of the government’s softening up process for the partial privatisation of ACC”, said Rosenberg. The increase is being reversed in the next levy year.
ENDS
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