Hourly earnings rise 7.4 percent

Average ordinary time hourly earnings increased by 7.4 percent in the year to the September 2022 quarter, while wage inflation, as measured by the labour cost index (LCI), was 3.7 percent, Stats NZ said today.

Average ordinary hourly earnings, as measured by the Quarterly Employment Survey (QES), increased to $37.86, an annual increase of $2.61 or 7.4 percent.

"This is the largest annual rise in ordinary time hourly earnings since this series began in 1989," international and business performance statistics senior manager Darren Allan said.

The LCI's all salary and wage rates (including overtime) index rose by 3.7 percent, the second highest annual increase since the series began in 1993.

The LCI's primary measure of wage inflation 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 hourly earning statistics in the QES.

Price changes attributed to changes in the quality or type of work done are included in the LCI analytical unadjusted measure, which increased 5.3 percent in the year to the September 2022 quarter.

Private sector wage growth outpacing public sector

"The private sector was the driving force behind the strong annual growth in both the LCI and QES wage measures," Allan said.

Private sector average ordinary time hourly earnings increased by 8.6 percent to $36.09.

Meanwhile, the public sector hourly earnings increased by 4.3 percent to $44.76.

Private sector wage inflation, as measured by the LCI, was 3.9 percent compared with 3.1 in the public sector.

The public sector includes central and local government, state owned enterprises, and public healthcare and education providers.

Record growth in professional and support services

The professional, scientific, technical, administrative, and support services industry was the largest contributor to the annual total wage growth in both the QES and LCI.

The QES average total hourly earnings (including overtime) for this industry increased by 10 percent from the previous year - the highest annual increase in the series.

Manufacturing, and healthcare and social assistance were the next highest contributing industries for both surveys, with manufacturing also experiencing all time high hourly earnings growth.

These industries are all relatively large, as well as having strong wage increases, causing them to contribute more to average wage growth than smaller industries.

In percentage terms, the largest annual increase in average total hourly earnings was in the accommodation and food services industry, which rose by 12 percent. The next largest movement was in the rental, hiring and real estate services industry, with earnings up 11 percent annually.