New Zealand sees significant increase in average hourly earnings

Public sector sees most substantial bump since 2006

New Zealand sees significant increase in average hourly earnings

Data released by Stats NZ today reveals a notable increase in New Zealand’s average ordinary-time hourly earnings, marking a 6.9% increase in the year to the December 2023 quarter. This information, derived from the Quarterly Employment Survey (QES), encompasses measures of ordinary-time hourly earnings in the public and private sectors.

Within the public sector, ordinary-time hourly earnings increased by 7.4% annually in the December 2023 quarter, according to the report. This marks the most substantial yearly rise since the March 2006 quarter.

“Annual growth in private sector wages was 6.6 percent this year, down from the recent peak of 8.6 percent in the year to the September 2022 quarter,” said Sue Chapman, business employment indicators manager at Stats NZ.

In the labor cost index (LCI), all salary and wage rates, including overtime, for the public sector show an increase of 5.7% annually, the highest rate since the inception of the LCI series.

Chapman elaborates on the recent trends, noting, “Recent growth in public sector earnings follows a period of pay restraint between April 2020 and March 2023 as a response to the impact of COVID-19.”

Increases to salary and wage rates in various sectors

In specific industries, wage hikes have been particularly pronounced. Average total hourly earnings in the education and training industry surged by 14% annually, reaching $43.72, while the health care and social assistance sector had a 10% increase, climbing to $43.59. These figures reflect an average of standard hourly rates, inclusive of overtime compensation, the report noted.

Chapman emphasizes the significance of these industries, stating, “Together, the education and health industries account for over half of all public sector employees. Both industries had pay agreements that came into effect late in the year.”

According to Stats NZ, key pay agreements, including collective agreements for primary and secondary school teachers and pay equity agreements for nurses, have significantly influenced wage dynamics in these sectors. As a result, the LCI captured substantial increases in both industries, with the health care and social assistance sector seeing a 6.6% rise and the education and training industry experiencing a 5.9% increase, marking the most substantial annual hikes since 2010.

The intricate nuances of wage dynamics within health and primary school education sectors were further elucidated by the September 2023 quarter’s primary school education pay agreements, which recorded an annual wage cost inflation of 4.3%.

The LCI is a measure of changes in wage and salary rates for a fixed quantity and quality of work. Meanwhile, QES considers in the analysis of average wage changes the changes in the workforce over time, including real-world compositional shifts.

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