Cautious optimism in wage levels - CTU

The CTU says that there is room for cautious optimism for wage levels, but many people are still not receiving any increases. “It is important for the economy that wage and salary earners have sensible wage increases. Otherwise there is a risk that lack of spending power will continue to drag the economy back into recession,” said CTU Economist and Policy Director Bill Rosenberg.

Wage levels continue to rise more slowly than inflation on an annual basis. The Labour Cost Index (LCI) increased by 1.6 percent in the year to June 2010 compared to 1.8 percent CPI inflation in the same period.

Average hourly earnings rose slightly faster, at 2.1 percent for the year but some of the difference is because the public service, which has higher average pay, has increased its employment faster than the private sector and so has a greater weighting in the average wage. This employment increase is mainly because of a seasonal rise in education and training paid hours.

Only 46 percent of workers received wage increases during the year, although this was an increase from 43 percent in the year to March. For those workers, the median increase was 3.0 percent and the average increase 3.7 percent. These increases have been falling steadily since September 2008.

“Many people have experienced wage freezes over the last two years, but will now be looking with concern at the very high inflation forecast over the next year due partly to government policies including GST and emissions trading,” said Rosenberg.

However there is some room for optimism from the last three months. The LCI rose 0.4 percent in the three months to June, better than the 0.3 percent increase in the CPI over the same time, and average hourly earnings rose 0.8 percent, following falls in the last two quarters.

The average ordinary time hourly wage now stands at $25.45 (and $25.49 with overtime). The average wage for women (including overtime) is now 87.2 percent of that for men, down from 88.0 percent a year ago.

ENDS

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