Wage inflation measured by the labour cost index (LCI) was 2.6 percent in the year to the December 2021 quarter, while average ordinary time hourly earnings rose 3.8 percent, Stats NZ said today.
Average ordinary time hourly earnings, as measured by the Quarterly Employment Survey, rose 3.8 percent in the year to the December 2021 quarter to reach $35.61. This follows a 3.5 percent annual increase in the September 2021 quarter.
The LCI for all salary and wage rates (including overtime) increased 2.6 percent in the year to the December 2021 quarter, up from 2.4 percent in the year to September 2021 quarter.
The LCI is often compared with the consumers price index (CPI) to see how wage inflation compares with consumer inflation (that is, the change in prices of goods and services bought by households). Annual CPI inflation was 5.9 percent in the year to the December 2021 quarter.
“Businesses surveyed in the LCI continued to raise wages in industries such as construction, and this is something we’ve seen flow into our most recent CPI numbers,” business employment insights manager Sue Chapman said.
| Quarter | CPI | LCI adjusted |
| Dec-11 | 1.8 | 2 |
| Mar-12 | 1.6 | 2 |
| Jun-12 | 1 | 2 |
| Sep-12 | 0.8 | 1.9 |
| Dec-12 | 0.9 | 1.8 |
| Mar-13 | 0.9 | 1.7 |
| Jun-13 | 0.7 | 1.7 |
| Sep-13 | 1.4 | 1.7 |
| Dec-13 | 1.6 | 1.6 |
| Mar-14 | 1.5 | 1.6 |
| Jun-14 | 1.6 | 1.7 |
| Sep-14 | 1 | 1.6 |
| Dec-14 | 0.8 | 1.8 |
| Mar-15 | 0.3 | 1.7 |
| Jun-15 | 0.4 | 1.6 |
| Sep-15 | 0.4 | 1.6 |
| Dec-15 | 0.1 | 1.5 |
| Mar-16 | 0.4 | 1.6 |
| Jun-16 | 0.4 | 1.5 |
| Sep-16 | 0.4 | 1.6 |
| Dec-16 | 1.3 | 1.6 |
| Mar-17 | 2.2 | 1.6 |
| Jun-17 | 1.7 | 1.7 |
| Sep-17 | 1.9 | 1.9 |
| Dec-17 | 1.6 | 1.8 |
| Mar-18 | 1.1 | 1.8 |
| Jun-18 | 1.5 | 1.9 |
| Sep-18 | 1.9 | 1.8 |
| Dec-18 | 1.9 | 1.9 |
| Mar-19 | 1.5 | 2 |
| Jun-19 | 1.7 | 2.1 |
| Sep-19 | 1.5 | 2.4 |
| Dec-19 | 1.9 | 2.6 |
| Mar-20 | 2.5 | 2.5 |
| Jun-20 | 1.5 | 2.1 |
| Sep-20 | 1.4 | 1.9 |
| Dec-20 | 1.4 | 1.6 |
| Mar-21 | 1.5 | 1.6 |
| Jun-21 | 3.3 | 2.1 |
| Sep-21 | 4.9 | 2.4 |
| Dec-21 | 5.9 | 2.6 |
Public sector wage growth lags behind private sector
This quarter, the private sector experienced stronger growth in hourly earnings when compared with the public sector.
Average hourly earnings increased 4.1 percent annually for the private sector, while public sector hourly earnings had a smaller 3.1 percent increase from the December 2020 quarter.
The public sector, as measured in the QES, includes most enterprises managed by the state, including central government (excluding the military), local government, public healthcare and education, state-owned enterprises, and the judiciary.
“Quality adjusted pay increases, as measured in the LCI, were lower in the past year for the central government administration industry than other public sector-dominated industries, such as healthcare and education,” Ms Chapman said.
Lower public sector wage growth followed the announcement of a wage restraint policy from the Government in May 2021 .
The LCI 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 QES’s hourly earning statistics. Pay increases from employment contracts would be captured by both surveys.
| Quarter | Private sector | Public sector |
| Mar-17 | 2.4 | 3.2 |
| Jun-17 | 2.5 | 3.3 |
| Sep-17 | 2.4 | 2.4 |
| Dec-17 | 3.3 | 2.9 |
| Mar-18 | 3.4 | 1.4 |
| Jun-18 | 3.1 | 2 |
| Sep-18 | 3.9 | 1.6 |
| Dec-18 | 3.9 | 1.4 |
| Mar-19 | 3.2 | 2.9 |
| Jun-19 | 4.2 | 3.1 |
| Sep-19 | 3.1 | 3.7 |
| Dec-19 | 2.6 | 5 |
| Mar-20 | 3.2 | 4.3 |
| Jun-20 | 2.3 | 3.4 |
| Sep-20 | 3.6 | 4.5 |
| Dec-20 | 4.4 | 3.3 |
| Mar-21 | 4 | 3.4 |
| Jun-21 | 4.4 | 3.5 |
| Sep-21 | 3.6 | 3.7 |
| Dec-21 | 4.1 | 3.1 |
Healthcare and manufacturing working longer hours
Total average weekly earnings (including overtime) per full-time equivalent (FTE) employee continued to grow, reaching $1,392 in the December 2021 quarter. This was a 1.8 percent increase from the previous quarter and a 5.7 percent increase annually.
The growth in FTE weekly earnings partially reflected an increase in average total weekly paid hours per FTE. Weekly hours rose by 1.9 percent annually over the year ended December 2021, with strong increases in the healthcare and social assistance and manufacturing industries.
FTEs in the healthcare and social assistance industry worked on average 5.7 percent more total paid hours a week, while those in the manufacturing industry worked 4.1 percent more than they had in the December 2020 quarter.
The increase in hourly earnings for the healthcare and social assistance industry was 6.6 percent annually, but when the increase in hours paid is taken into account, average total weekly earnings had a more notable 12.8 percent increase.
“The LCI, which removes the effect of changes in hours worked, also showed strong annual wage and salary growth for the health care and social assistance and the manufacturing industries,” Ms Chapman said.
