New Zealand's real wages remain among the weakest in the developed world, an OECD report reveals
New Zealand workers have seen some of the weakest real wage growth among developed economies, with the country's wages still hovering near their post-pandemic low even as most nations in the Organisation for Economic Co-operation and Development (OECD) have recovered lost ground.
This is according to the latest report from the OECD, which found that real wages in New Zealand and Australia were the only ones among 37 OECD countries analysed that remained "near the trough of the cost-of-living crisis" as of the first quarter of 2026.
New Zealand was among a group of six countries, alongside Australia, Czechia, Denmark, Italy and Sweden, where real wages remained more than two per cent below their Q1 2021 pre-inflation levels.
Across the OECD, about a third of the 37 countries analysed still had real wages below Q1 2021 levels.
Wages falling further behind
The picture is made worse by the direction of travel: wage recovery in New Zealand is slowing, according to the OECD report.
"It should be noted that wage recovery is slowing down in most of these countries, with annual real wage growth in Q1 2026 being lower than a year earlier – wage growth accelerated only in Czechia and Sweden," the OECD report read.
The findings are consistent with domestic data. Employment Hero's Jobs Report for February 2026 found that average wages in New Zealand grew by just 0.2% year-on-year — down sharply from the 5.6% growth recorded 12 months prior.
With inflation hovering around three per cent at the time, Employment Hero's General Manager NZ Neil Webster said the figures pointed to a real-terms loss for workers.
New Zealand's real minimum wage also fell over the 12 months to April 2026, according to the OECD report. This puts it among 11 countries, including Australia, Belgium, Canada, France, Greece, Luxembourg, Poland, Spain, Türkiye and the United States, where the statutory minimum wage lost ground to inflation over that period.
The OECD attributed the broader slowdown in real wage growth across member countries to several factors, including weaker labour productivity, easing labour market tightness, and "geopolitical and trade tensions" that have "maintained a climate of high economic uncertainty."
Looking ahead, the organisation warned that rising energy costs stemming from the Middle East conflict could further weaken labour markets while pushing inflation higher, a combination that would put additional downward pressure on real wages.
The OECD Employment Outlook 2026, titled Geographic Disparities in Jobs and Incomes, covers labour market developments across the organisation's 38 member countries.
Economists push back
Economists told Radio New Zealand that while the picture was grim, it may be being made to look worse by the data being used. The report draws on the labour cost index (LCI), which measures what employers pay for specific roles.
Infometrics chief forecaster Gareth Kiernan told RNZ that the LCI was not the ideal measure for international comparison, noting that Statistics NZ's unadjusted LCI, which strips out skill-level adjustments that may overcorrect, showed wages flat in real terms over the past year and down 0.1% since 2021.
"So still not great, but not quite as dire," he told the news outlet.
Kiernan also pointed to underlying structural issues as a driver of New Zealand's wage weakness.
"We aren't very productive when we work, our real incomes end up reflecting that, and everything seems expensive," he added.
Westpac senior economist Michael Gordon also told RNZ that OECD data on annual wages, rather than the LCI, showed the country's wages had risen 2.6% in inflation-adjusted terms over the past five years, "which was still fairly dismal but not much worse than the OECD average of three per cent."
