Continued Growth in Labour Costs

Continued Growth in Labour Costs

Labour costs rose by 2.2 percent from the June 2002 quarter to the June 2003 quarter, according to latest figures from Statistics New Zealand. The increase follows a 1.8 percent rise from the June 2001 quarter to the June 2002 quarter.

The costs of other business inputs showed contrasting movements from the June 2002 quarter to the June 2003 quarter. Producer input prices fell by 2.0 percent, while capital goods prices increased by 0.7 percent over the same period. These input costs were reflected in the prices charged by businesses for their outputs, which fell 0.6 percent from the June 2002 quarter to the June 2003 quarter. Consumer prices rose by 1.5 percent over the same period.

The salary and wage rates component of the Labour Cost Index increased by 2.3 percent from the June 2002 quarter to the June 2003 quarter, while the non-wage labour costs component increased by 1.3 percent over the same period.

The non-wage labour costs movement was partly driven by a 2.4 percent increase in annual leave and statutory holiday costs, which was mainly driven by rises in salary and wage rates.

This follows an increase of 2.1 percent from the June 2001 quarter to the June 2002 quarter.

Employer superannuation costs also contributed to the rise in non-wage labour costs. These costs rose 1.7 percent, partly as a result of higher pay rates.

Workplace accident insurance costs in the June 2003 quarter were flat (up 0.2 percent) compared with the June 2002 quarter. This was due to the decrease in ACC residual claims levy rates offsetting the rise in salary and wage rates.

Other non-wage labour costs – medical insurance, motor vehicles available for private use and employer-related low interest loans – fell by 4.8 percent overall from the June 2002 quarter to the June 2003 quarter, with lower costs for motor vehicles contributing to the fall.

Brian Pink

Government Statistician

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