Wages beat inflation

07/02/2012

Good employment news from Statistics New Zealand:

Salary and wage rates, which include overtime, increased 2.0 percent in the year to the December 2011 quarter, Statistics New Zealand said today. This rise follows a 2.0 percent increase in the year to the September 2011 quarter.

After the 2008/09 recession, annual wage rate growth in the labour cost index (LCI) dropped to a low of 1.5 percent in the year to the March 2010 quarter. Since then, the proportion of surveyed pay rates showing annual rises has grown – from 43 percent in the year to the March 2010 quarter to 56 percent in the year to the March 2011 quarter. This remained relatively stable during 2011 – including 57 percent in the year to the December 2011 quarter.

Salary and wage rates for the private sector increased 2.0 percent in the year to the December 2011 quarter. Annual growth remained steady throughout 2011. Public sector rates increased 1.8 percent in the year to the December 2011 quarter. This increase includes a 2.3 percent rise in the local government sector, the highest annual increase since a 2.5 percent rise in the year to the December 2009 quarter.

The Quarterly Employment Survey (QES), also released today, showed a rise in employment and total paid hours. For the December 2011 quarter, the seasonally adjusted number of full-time equivalent employees rose 0.6 percent, while seasonally adjusted filled jobs rose 0.5 percent. Seasonally adjusted total weekly paid hours rose 0.6 percent for the same period.

Average hourly earnings for ordinary time (ie excluding overtime) rose 2.8 percent for the December 2011 year, after rising 3.2 percent for the September 2011 year.

These aren’t big increases but given the uncertain global financial outlook it is encouraging.

Mat Nolan at the Visible Hand in Economics points out that the wage increase was higher than inflation and – who’s surprised? – people who made a fuss about wages growing more slowly than prices aren’t, or at least haven’t yet, celebrated  the positive reversal.


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