Canterbury leading the way in wage growth

Construction wage growth in Canterbury is considerably higher. Photo by Linda Robertson.
Construction wage growth in Canterbury is considerably higher. Photo by Linda Robertson.

Construction wage growth continues to be substantially higher in Canterbury than the rest of the country but there is little evidence that industry skill shortages are pushing wages higher nationally.

Statistics New Zealand figures released yesterday showed that the mean wage increase in the Canterbury construction sector in the year ending September was 6.8%, down slightly from 6.9% in the June year.

Nationally, construction wage growth was unchanged at 3.9%.

According to Statistic NZ's labour cost index (LCI), overall wage inflation in the construction sector remained stable and only a little above average at 2.3%.

LCI private sector, ordinary time, wages rose 0.5% in the September quarter to give an annual increase of 2.1%. All sectors, ordinary time rose 0.5% in the quarter and 1.9% annually.

Public-sector wage growth was lower than the private sector.

The LCI and quarterly employment survey (QES) came in close to expectations, showing moderate rates of wage and employment growth.

Wage growth measured by the QES rose 2.8% across all sectors but full-time employment growth and hours paid were notably weak.

ASB economist Daniel Smith said the Canterbury rebuilding work was expected to place some upward pressure on labour costs and wages in the coming year as skill shortages emerged. But there was little evidence of that effect on a sustained or nationwide basis so far.

Employment indicators in the QES were particularly weak in the latest quarter, but that followed three months of outsized strength so some reversion was not unexpected, he said.

The QES had not been a good indicator of employment and unemployment data recently.

The latest QES data confirmed ASB's expectation of modest employment growth in the third quarter.

ASB expected tomorrow's household labour force survey - the official measure of employment and unemployment - to show employment growth of 0.3%, with the participation rate remaining unchanged. The slight increase in employment should outstrip growth in the labour force, taking the unemployment rate down from 6.9% to 6.6%.

"Today's data largely confirmed what we expected. The moderate rate of wage and employment growth continued over the third quarter. Wage growth has been very stable for the last couple of years, with the LCI increasing by about 2% year-on-year," Mr Smith said.

Council of Trade Unions economist Bill Rosenberg said that with many people still finding times tough, it was important that wage increases ensured people had a living wage.

"Nothing has been heard from the Government on the minimum wage review, which would usually have finished its public consultation process by now. We hope they are not planning to slow increases for those who need them most"

The minimum wage increase flowed on to many people on low wages, he said.

The statistics also showed an opening of gaps. The LCI showed wages and salaries for central government employees rose only 1.3% for the year compared with 2.1% in the private sector.

The average wage also showed an opening in the gender pay gap from a 12.6% gap in September last year to a 13.9% gap in September 2012, he said.

Increases in the female average wage were 4.8% over the last two years compared for 6.9% for men -widening the pay gap, Mr Rosenberg said.


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