Wage growth still moderate, better rules needed to catch Kiwis up

"Wage growth was still slow over the last year, and though for some it picked up a little from the year before, it is uneven," says CTU Economist Bill Rosenberg commenting on the Labour Markets (Income) statistics released by Statistics New Zealand this morning.

Average hourly wages grew 3.1% in the year to June, more than the 2.3% growth last year, while the median (middle) hourly wage grew only 2.9%, which is less than the 3.4% growth last year.

"While this period includes a strong increase in the minimum wage on 1 April and the care and support pay equity settlement which took effect from July last year, it is clear that much more is needed to get wages moving upwards faster, particularly for low to middle income earners," he said.

"Employment law changes planned by the Government and more equal pay settlements will all help to lift wages this coming year, and further changes are needed to provide decent living standards. The share of national income that working people receive has fallen since 2009, showing that real wages are falling behind productivity increases. Learning from experience in many countries with higher incomes than New Zealand, Fair Pay Agreements will be an important step towards restoring working people’s share of income and making skilled Kiwi jobs more internationally attractive."

"The trends in wage inequality show the effect of recent law changes," Rosenberg says. "The difference between the median wage and the average wage is an indicator of inequality. The average wage is heavily influence by high incomes, and about two-thirds of wage and salary earners earn below the average hourly wage."

"Wage inequality between women reduced in the year to June, and it is now back to levels it was at in the mid-2000s. Women’s median wage is at 86.6% of their average wage. It is likely that the care and support pay equity settlement and strong rise in the minimum wage helped with wage equality between women. Almost two-thirds of workers on the minimum wage were women before the latest care and support settlement rise, according to MBIE figures."

"However wage inequality between men increased in the year to June, as it did last year, with their median hourly wage falling to 82.2% of their average wage. It is likely that growth in the wages of high income earners is still outstripping those on lower incomes."

"This is likely a factor behind the growing imbalance between male and female average wages. The gender wage imbalance in the average hourly wage still has men being paid 13.9% more than women per hour, up from 13.1% in 2017."

"Last year we published research showing a ‘hollowing out’ of wages because workers earning between the minimum wage and the average wage had been receiving pay rises at about half the rate of the highest wage and salary incomes over the last twenty years. There is clearly more policy improvement by Government needed to ensure the wage system is fairer all around," Rosenberg says.

ENDS

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