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Employment, wages up

Written By: - Date published: 3:27 pm, August 4th, 2008 - 43 comments
Categories: economy, wages, workers' rights - Tags:

Despite the economic slowdown, the labour market is holding up well and wages are up at the record rate.

The average hourly wage is now $24, up from $21.90 an hour 2 years ago. That’s a 9.6% increase. Take away 6.1% inflation and the average Kiwi worker is still 3.5% better off than two years ago. Considering the long-term average has been a 1% annual increase in wages above inflation and that in the 1990s wages went backwards for most, 3.5% in two years is impressive. despite the economy getting tougher this year, the average wage still grew 1.4% in both the March and June quarters.

The number of jobs bounced back in the June quarter, after falling in the March quarter. The number of jobs increased 2.1% in the last year, faster than the increase in the working age population (1%). It will be interesting to see how the unemployment numbers look when they come out later this week. Seeing as the number of people claiming the unemployment benefit continues to fall and the number of jobs continues to grow, we might see unemployment drop back lower, after it rose from 3.4% to 3.6% in the March quarter. Fears of unemployment blowing out beyond 5% may be exaggerated.

With the combination of increasing wages and more jobs means that, in total, Kiwis are taking in 8.8% more in work income than they were two years ago. That is helping to buffer our economy from the huge pressure of record oil prices and the international credit crunch.

Don’t forget that strong wages and employment are a result of government policy as well as economic factors. The minimum wage has been increased 17% in the last two years ($10.25 to $12), which is estimated to directly increase the wages of 300,000 workers and promote pay rises for another 300,000 who earn slightly above minimum wage. Good work rights have continued to help workers unionise, which helps them negotiate higher wage increases. If we choose to weaken those laws and let the minimum wage stagnate, Kiwi workers’ incomes will suffer.

43 comments on “Employment, wages up”

  1. BeShakey 1

    Probably more relevant to look at the median hourly wage to get an idea what the typical Kiwi is earning. I know these aren’t your figures, but reporting average wages is a silly idea when there are clearly a few outliers that will distort the picture, and what people are really interested in is what the typical kiwi earns, not the average.

  2. BeShakey. I know but stats doesn’t provide those figures 🙂

    Given what we know – the minimum wage is growing faster than the average wage and that lower decile incomes have risen fastest under Labour – I would think that the median is probably up faster than the average.

  3. Scribe 3

    Great news.

    That should mean that people don’t need to go on strike in the foreseeable future since they’ve been making out so well in this economy. Hallelujah!!!!

  4. Minimum wage increases are really artificial wage increase though.

  5. burt 5

    Yes Steve P, we must celebrate govt policies that see so many people on minimum wage.

  6. Tane 6

    Minimum wage increases are really artificial wage increase though.

    No more ‘artificial’ than capitalist ownership of the means of production or the institution of private property.

  7. pathetic burt

    without the minimum wage increases, those people would be on lower wages.

  8. infused. I’ll let you in on a little secret – all human institutions and customs, from the law to money to rights are ‘artificial’… they are artifices of our collective endeavour and cooperation… that doesn’t mean they are wrong or right, it does mean they are malleable.

  9. Net Wages 9

    What about publishing the Net figures rather than the figures before helengrad tax is deducted?

    [lprent: Another typo to add to the auto-moderation list. By the way bozo, you spell it as Nett in the context of accounts. That is different from the spelling of the medium that I often work in. ]

  10. Matthew Pilott 10

    Net Wages, did your employer deduct ‘helengrad’ taxes from you? You poor, poor fool. There is no such thing. I suggest you contact the police immediately, you’ve been had, sonny.

  11. ants 11

    The massive hole in this however is the fact that productivity is still poor, so in fact the economy as a whole is getting more expensive to do the status quo.

    Thanks to Labour’s impotent policies over the last 9 years where they have neglected infrastructure in favour of beaurecrats and waste, and our economy as a hole is up the creek without a paddle, no matter how many percentage gain statistics you pull out of the air.

    Thank goodness John Key has some real vision and is ready to lead NZ in to a new age.

  12. Felix 12

    Net Wages that was great! I love how you played with “Helen” and made it sound all soviet.

    You should meet burt – he has this brilliant bit he does where he calls Cullen “muppet” and then crosses it out.

  13. Matthew Pilott 13

    Ants – yawn. What was it? Something about the largest roading construction project in our history, 1200MW of energy capacity developed and such? Bit of infrastructure there methinks.

    Good to see you getting the National lines down pat first time though, saying that Labour have spent on Bureaucracy and waste, not infrastructure. Next time you should really say that we have a growth problem, not a debt problem, or someone might not realise you’re simply spouting their (incorrect) lines.

    Given our economy is doing very well right now in comparison to others, you might want to consider what kind of a creek we’d be up had National sold us up the river a few years back like they’d have done, given half a chance. I daresay we’d be looking a whole lot worse right now.

    I see English was spot on about “the punters” (i.e. you) really going for “that nice Mr Key” though, it’s just a laugh to see it in action, right here and now.

  14. mondograss 14

    So according to Ants, the 7 new hospitals, dozens of new schools and hundreds of km’s of motorway and busway etc that Labour have built were completely pointless exercises aimed at increasing beaurecratic waste. Personally, I call them infrastructure and can add many more examples to the list. Oh and they were paid for while reducing our debt to GDP ratio, rather than increasing it.

    Captcha: applicable voter (yep, that’s who we want)

  15. Anita 15

    Does anyone keep stats on how many people are on the minimum wage? I don’t remember ever seeing any, and can’t find any right now… But one of yous guys might know where to look.

  16. burt 16

    Tane

    No more ‘artificial’ than capitalist ownership of the means of production or the institution of private property.

    If you really think it’s artificial to have private property then you know absolutely nothing about human nature. If you think for one moment it took laws to allow people to say “I own that’ rather than human nature saying “it’s in my hands now so it’s mine’ then you have a lot to learn about people.
    Sure in some fictitious successful socialist state (the ultimate fantasy la-la land) all people share everything without any greed or envy – but not in the real world.

    Also Tane, did you spend the weekend deliberately breaking the law like Steve P did?

    [I endorsed our electoral advertisements in keeping with the EFA, proudly and openly. Accuse me wrongly of being a criminal again and you’ll be banned for life. It’s not like you’ll be any loss intellectually, you don’t even know what artificial means. SP]

  17. Felix 17

    Blah blah burt, of course you can pick something up and say it’s yours but without laws I’m just going to kick you in the nuts and take it off you.

    Do you ever think before you type these inane observations of yours?

  18. mike 18

    Thank god key is going to give us some infastructure to go with it.
    Just think all those on the minimum wage will be able to build the roads that people can use to get to their mcjobs on time.

  19. vto 19

    So with these wages up does that mean Clark is now getting us up the OECD ranks to that top half?

    You know, that was always a complete crock, (like Knowledge Economy and Economic TRansformation) because to do that was going to require some very major adjustments to various settings in the economy. With consequent upheaval.

    Why would Clark say something like that when it was so abundantly clear that she had no plan or policies that were capable of doing that? Was she just pulling our tits? Keen to hear any answers but must away for one of those rare early sleeps… zzz

  20. burt 20

    Felix

    Blah blah burt, of course you can pick something up and say it’s yours but without laws I’m just going to kick you in the nuts and take it off you.

    Exactly Felix, the laws are designed to protect property rights – which Tane say are artificial… Property rights are artificial like the minimum wage – yeah right.

    F##K you are a muppet – do you ever think before you type these inane denigrations of me? I don’t think I’ve ever seen a post from you with any substance – only denigration of what other people say – get a life Felix.

    PS: As for you kicking me in the nuts – a soft cock slow thinker like you – I would see it coming before you even worked out where my nuts were and I f##k you over for trying – like I just did here for your muppet comment.

  21. burt 21

    vto

    Why would Clark say something like that when it was so abundantly clear that she had no plan or policies that were capable of doing that?

    Because dreamy headed left wing voters believe what she says without questioning. A bit like Dr. Muppet Cullen in 1999 saying about the proposed lift of the top income tax bracket that 39% was moderate compared to the 48% the US had at the time. The dim-bulb dreamy headed socialists nodded and agreed but not one of them thought to question where that threshold kicked in – it was $400K USD at the time – circa $600K NZ – or 10 x our rich prick threshold.

    Then the dreamy headed socialists wonder why wages are so low when they tax people to sheds at such low levels – go figure.

    Come on in Felix, tell me that in 1999 $400K USD was actually $580K NZD and feel really smart about such a clever productive comment…..

  22. Draco TB 22

    (like Knowledge Economy and Economic TRansformation)

    It’s OT but I found this to be an interesting article on the knowledge economy.

    [lprent: ahh – avoid the the words “to be an interesting article”. I get sick of seeing that phrase in the spam trap. ]

  23. Draco TB 23

    Stuck in moderation again 🙁

    [lprent: can’t see it?]

  24. Matthew Pilott 24

    Were you asking burt where he kept his nuts? It’s clearly not in the normal place, given that comment.

    Burt, given that that threshold is 28% higher, it’s not that shocking that the US threshold is much higher. Since the campaigned of thattax rate, are you saying that everyone who voted for Labouror the left were ‘dreamy headed socialists’? That’s a whole lot of people!

    Oh, and taxes don’t account for low wages, not the most clever or productive comment there. Let’s not even talk about that earlier comment – bit of a relapse eh burt?

    Hey Felix – is that the hilarious thing you were talking about earlir? I’m not sure which is funnier, ‘helengrad’ or burt’s zany ‘muppet’ shindig. Any impartial judges to make the call? Too tough for me to pick, they’re both so good.

  25. Matthew Pilott 25

    unreadable comment – I wasn’t able to correct it:

    “Since the campaigned of thattax rate”

    “Since they campaigned on implementation of that tax rate..”

  26. Quoth the Raven 26

    If you think for one moment it took laws to allow people to say “I own that’ rather than human nature saying “it’s in my hands now so it’s mine’ then you have a lot to learn about people.
    Sure in some fictitious successful socialist state (the ultimate fantasy la-la land) all people share everything without any greed or envy – but not in the real world.

    Interestingly enough I was just reading Einstein’s little essay or article “Why socialism?” (I never realised Einstein was one of us lefties) and it made me think of burt’s little comments here, I’ll share the bit that made me think of burt. It’s very Marxist in tone:
    I have now reached the point where I may indicate briefly what to me constitutes the essence of the crisis of our time. It concerns the relationship of the individual to society. The individual has become more conscious than ever of his dependence upon society. But he does not experience this dependence as a positive asset, as an organic tie, as a protective force, but rather as a threat to his natural rights, or even to his economic existence. Moreover, his position in society is such that the egotistical drives of his make-up are constantly being accentuated, while his social drives, which are by nature weaker, progressively deteriorate….

    It is a very interesting that Einstein had these ideas. Just thought I’d share.

  27. burt 27

    Matthew Pilott

    Can you please clarify what you are talking about here? Which threshold?

    “Burt, given that that threshold is 28% higher”

    Is 28% higher a better way to justify moderate than saying 9%?

  28. Matthew Pilott 28

    I suppose with a percentage you don’t always need to give a proportinal difference, but then going from 9% to 18% is generally more significant than going from 80% to 89% (as a couple of examples).

    All things being equal, you’d pay 28% more tax at 48% than at 39%. Perhps I should have used ‘greater’ as opposed to ‘higher’.

  29. forgetaboutthelastone 29

    bert is actually a muppet himself – he and his partner earnie…


    Bert, though intelligent, is also grumpy, boring and easily frustrated. He enjoys activities such as paper clip and bottle cap collecting, cooking oatmeal and watching pigeons. In one sketch, Bert reads a book called “Boring Stories” and chuckles, “Boy, these Boring Stories are really exciting!”

  30. Perhaps you should have used an “a” but who cares big ears.
    How many kiwi’s still working for $12 an hour girls? Work 2 hours and you can buy a block of cheese and a jug.

  31. burt 31

    Quoth the Raven

    Einstein is not referring to an individuals behaviour rather a collective change of social behaviours and standards. He’s made an very interesting commentary. I think it would be foolish to assume that it’s only been a crisis in Einstein’s time and perhaps ours. It’s a crisis of human nature and it’s always been a part of societies evolution.

    I wouldn’t be surprised if Einstein had a theory about how society cycles back and forward between left & right. Eeach side describing the other sides values as debauched while at the same time the definition of left/right/debauched was constantly changing.

    If you are saying my comments represent a whole spectrum or sub section of society as Einstein was referring to then I’m faltered – thank you.

    Matthew Pilott

    Yes it’s all about how we paint it. When the top rate rich tax was introduced in 1999 Dr. Cullen compared our introduction of a wealth tax rate as moderate even though the US threshold kicked in at 1,000% higher than our threshold. 🙂

  32. burt 32

    forgetaboutthelastone

    I don’t collect paper clips unless you count the bent one stuck with blue-tac to my old Mac for occasional use to restart or to open the CD drawer. Bottle cap collecting – no, they go in the bin. I don’t cook oatmeal cause I like it raw and pigeons are indeed fascinating creatures. Now cause I’m grumpy – F-Off!

  33. Ari 33

    Burt, comparing our tax rates to the US is like comparing our rape rates to the Congo. It can tell you something useful, but you’ll end up with a very distorted view of the world if you take the other side of the comparison as the norm. New Zealand is among the more moderately taxed countries in the world. (a quick check of Wikipedia has us at 17th* out of 39 in terms of tax as a percentage of GDP, which is pretty good given that we are a small nation with lots of costs to cover. In comparison, the United States is 36th)

    I’d say striking a balance between making sure we pay for the things we need as a country and making sure we don’t put too high a burden on citizens who are productive members of the community is pretty important. We don’t really want to end up in the state the USA is where they can hardly pay for any new policies.

    Perhaps you should have used an “a’ but who cares big ears.
    How many kiwi’s still working for $12 an hour girls? Work 2 hours and you can buy a block of cheese and a jug.

    Who exactly are you talking to? I count one woman here (two if we count Lynn’s moderator comments) and zero girls.

    *1st is the highest amount of tax compared to GDP.

    [lprent: sorry – I’m XY not XX. Decrement your count by one.
    Apparently there was a welsh rugby touring when I was born and my parents were stuck for a name.. Lynn is a reasonably common male name in wales, but not here *sigh*
    On the other hand, have you heard that Johny Cash song “A boy named Sue” – you do tend to grow up tough and VERY mean. Great training for a BOFH. ]

  34. burt 34

    Ari

    Burt, comparing our tax rates to the US is like comparing our rape rates to the Congo.

    Yes it surprised me that Cullen did that, however what shocked me, but surprised me less, was that he compared our rate as moderate given the low low threshold it kicks in at.

    Re position 17th. In the SST there was a “How much tax are you really paying” explanation. Income tax was only 58.2% of the total tax paid. Like you say, comparing across countries on tax is somewhat folly. But hey 1 to you, 1 to Cullen and 0 for me so far.

  35. Felix 35

    Gee burt you anger easily. Get over yourself.

    You’re right about one thing though – I have no idea where your nuts are.

  36. Tim Ellis 36

    SP this is interesting analysis. I don’t believe you can discount the effect of increasing household debt servicing costs from your equation on whether kiwis are better off now than two years ago. Household debt servicing has jumped from about 10% of disposable income two years ago, to about 14% now. That wipes out the benefit of any wage rises.

    Household debt has been rising because wreckless government expenditure has been out of control, pushing up inflation and interest rates, making it much more expensive for New Zealand households to pay off their mortgages. It is an irony that Michael Cullen crows about National wanting to increase debt, when his policies have put New Zealand households deeper and deeper in debt because of irresponsible spending.

  37. burt 37

    Tim Ellis

    Dr Cullen told me that govt spending isn’t inflationary. So piss off!

  38. Quoth the Raven 38

    I think you’ll find burt that if you read the whole article Einstein at this time at least was clearly a socialist.

    The economic anarchy of capitalist society as it exists today is, in my opinion, the real source of the evil. We see before us a huge community of producers the members of which are unceasingly striving to deprive each other of the fruits of their collective labor—not by force, but on the whole in faithful compliance with legally established rules…

  39. burt 39

    Quoth the Raven

    Funny, even highly intelligent people can be partisan as hell.

    I feel a bit strange calling out Einstein but really

    We see before us a huge community of producers the members of which are unceasingly striving to deprive each other of the fruits of their collective labor—not by force, but on the whole in faithful compliance with legally established rules

    Describes more or less the general state of production and trade across centuries and continents. The human desire to get the best deal driving down margins combined with the unfairness of how the rewards of labour are distributed. You must have quoted very narrowly out of context or Einstein as well as not well educated is not a well socialised.

  40. Phil 40

    I too suspect that is a selective quote, taken out of context.

    The very foundations of physics are chaotic and random. That someone who dedicated their life to understanding the structure of the universe at that level, would not see a comparable model in the market economy, is quite suprising.

  41. Draco TB 41

    Here’s the entire article.

    The very foundations of physics are chaotic and random.

    Einstein spent a lot of his later years trying to disprove quantum theory but I’m still sure he had a better understanding of an energy system, which is what an economy is, than pretty much anyone else.

  42. Kevyn 42

    Matthew, I’m surprised the SMS or the opposition have never asked Cullen to prove that this actually is the largest roading construction project in our history. It is even stranger that whenever this topic is raised the only monetray figure quoted is the total NLTP funding event though only one third of that amount is for roading construction, the remainder being for policing, road maintenance, public transport, policy and admin.

    I doubt if Cullen has even checked whether his claim is correct, either in terms of spending or physical works since someone would have to go through all the annual reports from the MoW and Transit to compile a time series. When I asked for them (ten years ago) I was told they were only available in those annual reports. Not trusting a Nat/NZ First coalition or RAG to tell the truth I did the job myself on rainy Sunday afternoons. The end results are on my website although I wouldn’t expect the MSM to understand them. Act and the Nats wouldn’t dare use them, Piggy and Douglas are the biggest villians.

    If lane/km of new or improved roads and bridges is the yard stick then the years before and after the great depression and the first couple of decades were far more productive.

    If construction spending is the yardstick then the results are not as impressive as all the talk about billions suggests. It all depends where you live, or more precisely, where you drive.

    In million 2006 dollars:
    PM NZ AK/WN Rural NI SI
    1928-30 80 20 40 20
    Savage 160 35 75 50
    Nash 300 70 150 100
    Holyoak 325 120 130 75
    Kirk 350 150 100 75
    Lange 100 40 50 30
    Shipley 330 150 110 70
    Clark 1 350 150 150 70
    Clark 2 410 230 140 65
    Clark 3 650 420 170 50

    Eighty years ago the South Island has roughly one-third of the population, vehicles and petrol sales. Todays it’s about one-quarter. Curiously it is only the two Canterbury PM’s and Clark that have funded the South Island unfairly for road improvements, maintenance funding seems about right taking into account geological differences as well as traffic and road length.

    If spending on land transport as percent of GDP is the yard stick then the years before and after the great depression and the first couple of decades were possibly bigger spendups. Ditto for the Seddon era. The Vogel years make Cullen look positively spendthrift.

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  • $2.7m for Hokianga infrastructure
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  • New fund to support housing and construction sector
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  • Subsequent children legislation to change
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