Indications of wages rising

Written By: - Date published: 8:17 am, February 15th, 2022 - 16 comments
Categories: Economy, im/migration, immigration, International, wages, workers' rights - Tags:

It sounds like the Industrial and Trades sector of the economy has had a significiant wage rise over the last year. While we wait for the wages stats data, this is an interesting indicator.

Data from industrial recruitment agency OneStaff shows the national median hourly pay in the sector is now $27 an hour, up $2 from 2020/21.

Taranaki recorded the biggest increase, with the median up $4 to $28 an hour.

Auckland, Bay of Plenty and Wellington were level on $28 an hour, and Northland was the only region to decline, down $2 to $25 an hour.

OneStaff chief executive Jonathan Ives said while bigger cities paid the most, wage workers needed to consider other factors before choosing to relocate for work.

“Cost of living can outstrip wage gains extremely quickly. Workers who are considering relocating should be thinking more about places like Taranaki and Southland which are on pay parity, or close, with places like Auckland and Wellington,” he said.

Ives said the wage pressure caused by the Covid pandemic was expected to stick around.

RNZ: “Trades sector sees wage growth across the board“

Most of the rise will probably be directly attributed to covid-19 disruptions to migration and to short-term imported labour, allied with the massive increase in building work.

Ives also pointed out that even if the borders opened immediately then it will take time for the disruptions related to covid-19 and the consequential changes in economic patterns (including competition for workers and skills) to subside.

The likelihood of ‘normality’ returning soon is a bit of a myth. Apart from the reality that covid-19 hasn’t gone away and is likely to keep rearing waves of new variants for most of this decade, ‘normality’ never returns after economic shocks. You just wind up with a new balance emerging.

You can see this happening as a result of the extensive disruptions in supply chains, where the ethos of the last four decades of the shift to ‘just-in-time’ has been shifting back to stocking ‘just-in-case’. This was apparent back in early 2020 (as this following blog quote indicates), and has become increasing obvious over the last 18 months.

Although predicting where and when the icebergs will appear is a good basis for production planning, that is only when the water is calm. When those icebergs appear out of nowhere and are unavoidable, there is no way around it. In times of crisis, the Just-in-Time method leaves no option but for these companies to hit those icebergs head-on.

We saw this happen during the pandemic.

Due to breakages in the supply chain and increases in demand for certain types of goods, companies that have originally operated under Just-in-Time had problems more complex than manageable.

As reported by the Atlantic, “The Institute for Supply Management, which conducts monthly economic surveys, found that nearly 75 percent of the companies it contacted in late February and early March reported some kind of supply-chain disruption due to the coronavirus. And 44 percent of the companies didn’t have a plan to deal with this kind of disruption.”

The truth of the matter is that supply-chain disruptions happen, and they will continue to do so.

Jenna Koo: “Just-in-Time vs Just-in-Case“

I’d say that there is also a need for management to shift their labour market thinking and to adjust to the new realities. OneStaff also reported some information that indicates that local employers are still grappling with the change in our local labour market.

The survey also showed that it would take a company $5 per hour more to attract an employee from their current employer, while retaining staff was “significantly” cheaper.

Overtime culture also remained rife in New Zealand, the survey found.

OneStaff said two-thirds of workers received only their normal hourly rate for any overtime they do per month, as opposed to penal rates, such as increased pay that others received.

“It’s surprising how many employees aren’t getting some kind of penal rate or overtime rate and I think that it is something that employers need to look very carefully at,” Ives said.

RNZ: “Trades sector sees wage growth across the board“

We should be due to get the December 2021 Quarter results shortly from Tatauana Aortearoa (StatsNZ). The September results showed a quarterly increase of about 2.4% across all sectors, with 2.5% in the private sector. There was also a sharp fall in unemployment and under-utilisation rates. Both trends are likely to continue. The most recent 34 day indicators in the week ended 26th December indicated a week increase in media wages of 0.42%.

Retaining workers is going to become a focus for employers as poaching or importing workers remains difficult. This isn’t only in the industrial and trades sector. In my sector of high end export technology getting skilled employees keeps getting harder and more expensive.

There is likely to be a lot of whinging from the crony capitalist sector of the economy wanting the old days of underpaying backpackers under the table or using debt slavery on migrant visitors will probably escalate. Those days were certain to be disappearing even before this particular pandemic. I suspect that we’re going to see some delayed permanent shifts in the global labour markets triggered by the pandemic.

While the world population is still rising, it is doing it at a ever decreasing rate (with the exception of parts of Africa). The demographics are shifting slowly to labour becoming scarcer, as the number of new entrants starts to fall behind those leaving the workforce. The economies where the migrants with any skills have been coming from have been increasing the wages over costs significantly in recent decades, reducing the incentives for them to leave their culture behind.

To me it looks like employers are going to have to learn a new culture about how to retain staff and how to live with a shortage of cheap casual labour.

16 comments on “Indications of wages rising ”

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  1. PsyclingLeft.Always 1
    15 February 2022 at 8:30 am

    Aye ! The whine from the (very) wealthy Vineyard/Orchard/Farm/Hospo owners to reopen our borders….and let BAU resume has become more insistent. Ah, no. We do not want to ever go back to competing with cheap temporary (or other) labour. Now is definitely time for NZ Workers to Unite !

  2. Blazer 2
    15 February 2022 at 8:38 am

    Wonderful.

    So Joe Lunchbox will net about $900 for a 40hr wk @$27 p.hr.

    After paying his median rent of $560,he will have $340 left for him and his family to pay for all his expenses and enjoy the kiwi dream,a brighter future.

    Meanwhile owners of empty houses in Auckland, assuming rises of only 1/2 that of the last year, will gross $3000 per week .

    Very good,the new 'normal'.

    • lprent 2.1
      15 February 2022 at 11:05 am

      I guess you like idiotic revolutions as well. Because obviously the only way to change anything is immediately, and destroying the means of raising living standards is the only way to go…. Always good to meet a glass should always be empty type of person like yourself – it reminds me why Rick Mayall portrayed you so clearly on the young ones.

      Having any changes in wages in a positive direction of increase after a couple of decades where that didn't happen is a good start. Besides, I don't know of many dual couple families that don't have two earning parents these days. Your ideas of economics appears to have been fossilised in the 1950s.

      Similarly, having smaller numbers of housing sold in auctions is an encouraging sign on the speculative house price boom faltering.

      But of course everything has to happen immediately for you. It sounds like you missed some of the basic training that infants get. Wanting something now doesn't mean that you get it now.

      • Blazer 2.1.1
        15 February 2022 at 11:24 am

        Too funny!

        Half empty is an exaggeration….completely empty more like.

        When historical measures of income to house price have now tripled,it's hard to understand your enthusiasm for 'modern monetary theory'.

        As for immediately…do behave.

        The kick the can down the road policy for the last 20 years,signals declining home ownership and the subsequent rise in inequality as now perfectly acceptable .

        Mentioning the 50's is a good reminder of just how prosperous a time that was. They were years of the Gold Standard,a regime done away with in 1971by Nixon as the cost of wars made it unsustainable.

        Mind you most of your post is assumptive drivel and bereft of fact.

        • Patricia Bremner 2.1.1.1
          15 February 2022 at 1:06 pm

          noBlade your last sentence applies to your posts. You diss everyone else and feel you're opinions are so much more correct and important.
          Iprent has standing here you may only dream of.

        • Blade 2.1.1.2
          15 February 2022 at 4:16 pm

          Ah, the Gold Standard, where a dollar was backed up. Robbo wouldn't have liked that. He would have mandated all us Righties pan for gold down Otago way so he could print more money.

          Hold on…!

  3. barry 3
    15 February 2022 at 9:24 am

    I think we should rename overtime rates – "penal rates" should be "reward rates".

  4. Phil 4
    15 February 2022 at 10:28 am

    the ethos of the last four decades of the shift to ‘just-in-time’ has been shifting back to stocking ‘just-in-case’.

    Holding excess stock or input materials is *really expensive* and even if you're holding conservative levels of 'just in case' stock, very few firms on the planet that has the cashflow necessary to hold a year or more worth of their product to cover a covid-sized disruption.

    Business interruption, trade credit, and other supply chain-adjacent insurance products are really expensive right now (for obvious reasons) but coming out the other side of Covid (in however many years that takes) I suspect those products are going to become really attractive options for firms looking to secure their viability into the future.

    • Nic the NZer 4.1
      15 February 2022 at 11:14 am

      Maybe we should review the Dick Smiths collapse with these points in mind?

    • lprent 4.2
      15 February 2022 at 11:35 am

      phil, I know that it is expensive. That was drummed into me by having a family that specialised in production management and doing an MBA focused on that.

      However the key phrase here is "excess stock".

      Basically the items that are in short supply are the small and expensive items. Normally if you'd have a shipping delay, then you'd fly them.

      The problem at present is that the surface shipping is trapping a lot of stock in freighters. The shortage of airfreight means that they can't easily get around it because their components get caught in airports (I had a key component stuck in Charles DeGaulle airport for 3 weeks last year).

      Most supply problems are not in the finished goods, they are in components required to make finished goods. There is seldom a need to hold a year of components stock either at the source manufacturer or at the receiving manufacturer. They are just needing to hold more than a few weeks worth to buffer ongoing production because there is already a lot of stock in transit.

      The product BOMs on most products these days are usually minor costs compared to the amount of intellectual property in the design of the product, how to market it, maintaining distribution systems, and a whole host of things.

      So having a lack of supply on a single missing chip that stops a cars rolling off a production, or a specialised hardware bus adapter for some bespoke bit of industrial computing is hugely costly. Mostly because it doesn't allow a return to made as fast in the intellectual property.

      Which means that the cost of holding more component stock really isn't that much of an issue. Because the cost of not getting a return on the IP in a finished good is so huge that the inventory BOM cost usually just fades into the background compared to the risk of not having the components to produce and sell the IP.

      If you ever want to find out this at the ground level, just walk into a specialised bike shop and start talking with them about the costs of not having the components to make up their custom and enhanced bikes. Really stupid things like not having anti-puncture tires (crucial on Auckland roads) really irritate the hell out of them.

  5. Ad 5
    15 February 2022 at 11:08 am

    Two weeks ago we got MSD to put out texts to come and work for us – to 1,800 people.

    Multiple vacancies, right across the country, multiple disciplines.

    3 replies.

    It’s tight.

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