Stats NZ has a new website.

For new releases go to

www.stats.govt.nz

As we transition to our new site, you'll still find some Stats NZ information here on this archive site.

  • Share this page to Facebook
  • Share this page to Twitter
  • Share this page to Google+
Labour Cost Index (Salary and Wage Rates): June 2014 quarter
Embargoed until 10:45am  –  06 August 2014
Commentary

Annual wage rates grow 1.7 percent

The labour cost index (LCI) increased 1.7 percent in the year to the June 2014 quarter. This follows a 1.6 percent increase in the year to the March 2014 quarter.

At the same time last year, the LCI had an annual increase of 1.7 percent.

 

Salary and ordinary time wage rates increased 1.6 percent in the year to the June 2014 quarter. This follows a 1.5 percent increase in the year to the March 2014 quarter.

Overtime wage rates increased 2.3 percent in the year to the June 2014 quarter. This follows a 2.1 percent increase in the year to the March 2014 quarter.

Private sector annual wage rate growth edges up, public sector remains flat

Private sector salary and wage rates (including overtime) increased 1.8 percent in the year to the June 2014 quarter. This follows a 1.7 percent increase in the year to the March 2014 quarter.

Public sector salary and wage rates (including overtime) increased 1.2 percent in the year to the June 2014 quarter, the same as in the year to the March 2014 quarter. The latest annual growth in the public sector came from increases in central government (up 1.0 percent) and local government (up 1.8 percent). This is the lowest annual increase for central government since the year to the March 1995 quarter.

 

 

Minimum wage increase influences June quarter

The adult minimum wage increased from $13.75 per hour to $14.25 per hour (a 3.6 percent increase) on 1 April 2014. This affected the LCI June 2014 quarter results. If the increases that were due to minimum wage had been processed in the LCI as no change, then in the year to the June 2014 quarter:

  • all salary and wage rates (including overtime) would have increased 1.6 percent, instead of 1.7 percent
  • private sector salary and wage rates (including overtime) would have increased 1.7 percent, instead of 1.8 percent
  • private sector ordinary time salary and wage rates would have remained unchanged at 1.8 percent.

For the June 2014 quarter, 15 percent of all private sector ordinary time salary and wage rates would have increased, instead of 17 percent.

Skill level 5 was also affected by the minimum wage increase. This level includes occupations that require a New Zealand Register level 1 qualification, no qualification, or a short period of on-the-job training (eg clerical and administrative workers, labourers, sales workers). If the increases due to the minimum wage were treated as unchanged, wage rates for skill level 5 occupations would have risen 0.6 percent this quarter. Instead, they rose 0.8 percent.

Annual median up after easing for five consecutive quarters

Of all salary and ordinary time wage rates in the LCI sample, 57 percent rose in the year to the June 2014 quarter. This is the largest annual proportion increasing since the March 2012 quarter. In contrast, 54 percent increased in the year to the March 2014 quarter and 55 percent increased in the year to the June 2013 quarter.

Of the 57 percent that increased in the year to the June 2014 quarter, there was:

  • a median (middle) annual increase of 2.4 percent
  • a mean annual increase of 3.1 percent.

In the June 2014 quarter, 16 percent of all salary and ordinary time wage rates rose. This is the largest June quarter proportion increasing since 2008. In contrast, 12 percent increased in the March 2014 quarter and 14 percent increased in the June 2013 quarter.

Of the 16 percent that increased in the latest quarter, there was:

  • a median (middle) quarterly increase of 2.5 percent (up from 2.2 percent in the March 2014 quarter)
  • a mean quarterly increase of 3.2 percent (up from 2.9 percent in the March 2014 quarter).

Graph, Annual proportion increasing and mean increase, all sectors combined, surveyed salary and wage rates, June 2009 to June 2014 quarter.

In the year to the June 2014 quarter, the mean increases by sector were:

  • private sector, 3.4 percent
  • public sector, 2.3 percent.

In the year to the June 2014 quarter:

  • 38 percent of salary and wage rates rose no more than 3 percent
  • 19 percent of salary and wage rates rose more than 3 percent.

Graph, Distribution of annual movements, all sectors combined, surveyed salary and wage rates, June 2009 to June 2014 quarter.

In contrast, in the year to the June 2013 quarter:

  • 34 percent of salary and wage rates rose no more than 3 percent
  • 22 percent of salary and wage rates rose more than 3 percent. 

Analytical unadjusted LCI shows annual growth of 2.9 percent

The analytical unadjusted series is an additional measure that complements the official LCI and Quarterly Employment Survey (QES) indicators. Like the LCI, the unadjusted series measures changes in salary and wage rates for a fixed quantity of labour, but reflects quality change within occupations in addition to price change.

Unadjusted salary and ordinary time wage rates increased 2.9 percent in the year to the June 2014 quarter, after increasing 2.8 percent in the year to the March 2014 quarter.

Private sector unadjusted salary and ordinary time wage rates increased 3.4 percent in the year to the June 2014 quarter, after increasing 3.1 percent in the year to the March 2014 quarter.

Analytical unadjusted and adjusted salary and ordinary time wage rates
Private sector and all sectors combined
June 2014 quarter
Sector Percentage change from previous quarter  Percentage change from same quarter of previous year 
Adjusted  Unadjusted  Adjusted  Unadjusted 
Private sector 0.6 0.9 1.8 3.4
All sectors 0.5 0.7 1.6 2.9

QES and LCI ordinary time rises

Annual percentage changes in salary and ordinary time wage rates vary between the QES and LCI measures. For the year to the June 2014 quarter:

  • LCI salary and ordinary time wage rates were up 1.6 percent
  • QES average ordinary time hourly earnings increased 2.5 percent
  • the LCI analytical unadjusted series was up 2.9 percent.

 

 

The QES average earnings statistics are often compared with the LCI salary and ordinary time wage rates. However, the QES average earnings statistics reflect not only changes in salary and wage rates, but also compositional changes between and within businesses in surveyed industries.

In comparison, the LCI measures changes in salary and wage rates that employers pay to have the same job done to the same standard. Rises to match the market, retain staff, or reflect the cost of living are shown in the LCI, while rises reflecting individual performance or years of service are filtered out.

The LCI analytical unadjusted series fixes the amount of work, but reflects quality changes within the occupations (such as individual performance or years of service) in addition to price change.

For more information about the differences between the LCI and the QES, please see 'Comparing the QES and the LCI' under the data quality section of  Quarterly Employment Survey: June 2014 quarter.

Comparison with consumer prices

The prices of goods and services bought by households, as measured by the consumers price index (CPI), increased 1.6 percent in the year to the June 2014 quarter (see Consumers Price Index: June 2014 quarter). The LCI salary and wage rates (including overtime) increased 1.7 percent over the same period.

GST rose from 12.5 percent to 15 percent on 1 October 2010. This affected annual CPI movements from the December 2010 quarter to the September 2011 quarter. The graph below shows what the annual CPI percentage increases would be if prices collected from the December 2010 quarter to the September 2011 quarter were processed with GST of 12.5 percent for goods and services that are subject to GST.

 

 

Personal income tax rates decreased at the same time as the GST rate rose. However, since the LCI measures changes in gross salary and wage rates, it did not directly reflect the reductions in income tax rates.

Construction wage growth flat in Canterbury, edges up for rest of New Zealand

In the year to the June 2014 quarter, salary and wage rate growth (including overtime) in the Canterbury construction industry increased 3.0 percent – the same as in the year to the March 2014 quarter. For the rest of New Zealand, wage rate growth in the construction industry rose 1.9 percent in the year to the June 2014 quarter, up from a 1.7 percent increase in the year to the March 2014 quarter.

The first earthquake in Canterbury occurred in September 2010. Salary and wage rates for the September 2010 quarter were collected as at 15 August. Since then, wage rates have increased 13.7 percent in the Canterbury construction index. This compares with a 7.7 percent increase for the rest of New Zealand.

 

 

In the year to the June 2014 quarter, the mean increase for surveyed salary and ordinary time wage rates that rose in the Canterbury construction industry continued to be higher than the rest of New Zealand. 

The mean increases of the rates that rose for the year to the June 2014 quarter were:

  • 4.4 percent for the Canterbury region
  • 4.1 percent for the rest of New Zealand.

For further information, refer to the supplementary tables with this information release.

In response to the Canterbury earthquakes, we created six new regional analytical series from the existing LCI sample. These may be revised as the classification by region is refined.

The LCI is designed to measure changes in salary and wage rates at a national level and is not intended to provide accurate regional estimates. See data quality for more information. 

For more detailed data, see the Excel tables in the 'Downloads' box.

  • Share this page to Facebook
  • Share this page to Twitter
  • Share this page to Google+
Top
  • Share this page to Facebook
  • Share this page to Twitter
  • Share this page to Google+