Wage rises squeezed

Stats NZ figures on the second quarter’s labour market show cost growth was not as high as feared, but it is still high. Annual wage growth is around record highs and wage increases were widespread in the second quarter of this year.

Labour costs rose 1.1% quarter-on-quarter for the private sector LCI (excluding overtime), with annual LCI inflation still elevated at 4.3%. Labour costs in the public sector rose a more tepid 0.6% quarter-on-quarter (4.2% year-on-year) but look set to move higher still given well-publicised wage settlements that could lift wage demands for both public and private sector workers.

The labour data show 65% of jobs had annual wage increases, compared to 66% in the first quarter data. Of the jobs, 17% had increases between 3-5% whereas a record 40% had increases greater than 5% in the second quarter of this year.

Average hourly earnings from the Quarterly Employment Survey (QES) revealed a sizable rise, but  with the annual increase easing to 6.9%. Weekly earnings advanced at a solid 6.4% clip over the June 2023 year.