Annual wage inflation rises to 3.4 percent

Annual wage inflation rises to 3.4 percent

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Wage inflation, measured by the labour cost index (LCI), was 3.4 percent in the year ended June 2022, while average ordinary time hourly earnings rose 6.4 percent, Stats NZ said today. 

The LCI for all salary and wage rates (including overtime) increased 3.4 percent in the year ended June 2022, up from 3.0 percent in the year ended March 2022.

“The June quarter had the largest increase in LCI salary and wages rates since late-2008. Over the year, a steadily increasing number of wages have been raised to better match market rates, as well as attracting or retaining staff,” business employment insights manager Sue Chapman said.

“Nearly two-thirds of roles surveyed in the LCI saw an increase in ordinary-time wage rates in the year ended June 2022 – the highest level since this series began in 1993.”


  


The LCI’s primary measure of wage inflation adjusts for changes in employment quality. Therefore, employees receiving promotions or moving to different roles do not affect this measure of wage inflation. However, these movements would be captured in the Quarterly Employment Survey’s (QES) hourly earning statistics.

Price changes attributed to changes in the quality or type of work done are included in the LCI analytical unadjusted measure, which increased 5.1 percent in the year ended June 2022.

Pay increases from collective employment agreements or minimum wage increases would be captured by all three measures.

Average ordinary time hourly earnings, as measured by the QES, rose 6.4 percent in the year ended June 2022 to reach $36.97.

“Both the LCI and the QES are showing wage increases not seen in over 10 years,” Ms Chapman said.

While wages have lifted over the past year, annual consumer price inflation has exceeded annual wage inflation over the same period. The consumers price index (CPI) increased 7.3 percent in the year ended June 2022 (see Annual inflation at 7.3 percent, 32-year high).

“The adjusted LCI measures changes in the cost of labour for businesses, so this comparison contrasts changes in labour costs with changes in consumer prices – it is not a direct comparison of wages and cost of living,” Ms Chapman said.


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