Wages climbing faster than CPI

31 June 2015

Wages climbing faster than CPI

Private sector pay increases continue to run well ahead of inflation during the past year, according to employment relations consultancy Adelhelm & Associates’ latest private sector wage survey.

For the year to June, companies taking part in the survey increased pay rates by an average of 2.38 percent – more than seven times the 0.3 percent increase in the Consumer Price Index during the same period.

Senior Industrial Relations Consultant Anna Holmes said the recent economic slowdown is likely to be one reason for the gap.

“The uncertainty around China’s short-term economic situation, the soft Australian economy, and falling milk prices have put the New Zealand economy in a very different place from where it was at the start of the year – which is when companies would have set their budgets and unions their targets for negotiation,” said Ms Holmes.

Ms Holmes said disruption during wage negotiations during the past year had been at an all-time low, but cautioned that the coming year might be more turbulent.

“With the rapidly slowing economy, employers will be focusing on operating costs and will likely attempt to narrow the gap between wage increases and any increase in the CPI,” she said.

“As a result, wage increases in 2016 could be well below two percent."

The Adelhelm & Associates survey draws on information from 246 collective agreements supplied by 72 leading private sector companies. The company will be discussing the survey in more detail at a briefing in Auckland next Tuesday.

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