Labour Cost Index (Salary and Wage Rates): March 2009 quarter

Notes for this release

Improved historical information on changes to central government primary and secondary school education pay rates has been incorporated back to the September 2005 quarter, resulting in revisions to some previously published figures. See the 'Education revisions' section later in this commentary.

Overview

The labour cost index (LCI) showed an increase of 3.3 percent from the March 2008 quarter to the March 2009 quarter (ie the year to the March 2009 quarter). In comparison, the Quarterly Employment Survey (QES) average hourly earnings increased 5.3 percent in the year to the March 2009 quarter.

The QES average earnings statistics reflect not only changes in pay rates, but also compositional and other changes across and within the paid workforce. In comparison, the LCI measures changes in salary and wage rates for a fixed quantity and quality of labour input. Service increments, merit promotions and increases (or decreases) relating to the performance of individual employees are not shown in the index.

In the LCI, salary and wage rates (including overtime) increased 0.6 percent in the March 2009 quarter. This is down from the 0.7 percent increase in the December 2008 quarter and a revised 1.2 percent increase in the September 2008 quarter.

Salary and ordinary time wage rates increased 3.4 percent in the year to the March 2009 quarter, down from a revised 3.6 percent increase in the year to the December 2008 quarter. In the March 2009 quarter, salary and ordinary time wage rates increased 0.6 percent, down from the 0.7 percent increase in the December 2008 quarter.

Overtime wage rates increased 3.8 percent in the year to the March 2009 quarter. This followed a 3.6 percent increase in the year to the December 2008 quarter. In the March 2009 quarter, overtime wage rates increased 0.8 percent, following a 1.0 percent increase in the December 2008 quarter.

 

In the year to the March 2009 quarter, the mean increase for all surveyed salary and ordinary time wage rates that rose was 5.7 percent. In the March 2009 quarter, the mean increase for all surveyed salary and ordinary time wage rates that rose was 4.5 percent.

Sector movements

In the year to the March 2009 quarter, salary and wage rates (including overtime) increased 4.3 percent for the public sector, following revised increases of 4.7 percent in the year to the December 2008 quarter, and 4.8 percent in the year to the September 2008 quarter. The increase in the year to the March 2009 quarter was a result of a 4.5 percent increase in the central government sector and a 2.6 percent increase in the local government sector.

Salary and wage rates (including overtime) for the public sector increased 0.6 percent in the March 2009 quarter, following revised increases of 0.8 percent in the December 2008 quarter and 1.8 percent in the September 2008 quarter. The latest quarterly increase is the lowest increase recorded for the public sector since a 0.3 percent rise in the June 2007 quarter.

Private sector salary and wage rates (including overtime) increased 3.1 percent in the year to the March 2009 quarter. This followed increases of 3.2 percent and 3.7 percent recorded in the years to the December 2008 and September 2008 quarters, respectively.

In the March 2009 quarter, salary and wage rates (including overtime) in the private sector rose 0.6 percent, following rises of 0.7 percent in the December 2008 quarter and 1.1 percent in the September 2008 quarter. The latest quarterly increase is the lowest recorded for the private sector since an identical rise of 0.6 percent in the March 2007 quarter.

 

Industry movements

In the year to the March 2009 quarter, the industry groups with the largest annual increases in salary and wage rates (including overtime) were:

• Education – 5.7 percent
• Health and community services – 4.4 percent
• Mining – 4.3 percent.

Another industry group with a notable movement in the year to the March 2009 quarter was:

• Agriculture, forestry and fishing – 4.0 percent

Salary and wage rates (including overtime) increased 5.7 percent in the year to the March 2009 quarter for the education industry. This followed a 6.3 percent revised increase in the year to the December 2008 quarter (the largest annual increase since the series began in the June 2001 quarter) and revised increases of 6.1 percent and 3.8 percent in the years to the September 2008 and June 2008 quarters, respectively. In the March 2009 quarter, salary and wage rates (including overtime) increased 0.7 percent for this industry. This followed a 0.4 percent increase in the December 2008 quarter, a 2.7 percent revised increase in the September 2008 quarter (the largest quarterly increase since the series began in the June 2001 quarter), and a 1.8 percent revised increase in the June 2008 quarter. The main reason given by respondents for the latest quarterly increase was a result of collective employment agreements coming into effect.

Health and community services salary and wage rates (including overtime) increased 4.4 percent in the year to the March 2009 quarter. This followed increases of 4.3 percent in the year to the December 2008 quarter, 5.7 percent in the year to the September 2008 quarter, and 5.1 percent in the year to the June 2008 quarter. In the March 2009 quarter, salary and wage rates (including overtime) increased 1.1 percent for this industry, following increases of 0.5 percent in the December 2008 quarter, 1.6 percent in the September 2008 quarter, and 1.1 percent in the June 2008 quarter. The main reason respondents gave for the latest quarterly increase was the impact of collective employment agreements coming into effect.

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In the year to the March 2009 quarter, salary and wage rates (including overtime) for the mining industry increased 4.3 percent. This followed increases of 4.8 percent, 4.1 percent, and 5.3 percent in the years to the December 2008 quarter, September 2008 quarter, and June 2008 quarter, respectively. In the March 2009 quarter, salary and wage rates (including overtime) increased 0.4 percent, following increases of 1.7 percent, 1.2 percent, and 0.9 percent in the December 2008, September 2008, and June 2008 quarters, respectively. The main reason respondents gave for the latest quarterly increase was to reflect the cost of living.

In the year to the March 2009 quarter, salary and wage rates (including overtime) increased 4.0 percent for the agriculture, forestry and fishing industry. This is the largest annual increase since the series began in the June 2001 quarter. The latest annual increase followed increases of 3.7 percent in the December 2008 quarter (the second largest annual increase for this industry since the series began) and 3.5 percent in the year to the September 2008 quarter. In the March 2009 quarter, salary and wage rates (including overtime) increased 0.8 percent, following increases of 1.0 percent in the December 2008 quarter and 1.4 percent in the September 2008 quarter. The main reason respondents gave for the latest quarterly increase was to reflect the cost of living 

Occupation movements

In the year to the March 2009 quarter, overall annual increases in salary and wage rates (including overtime) for the three broad occupation groups were:

• Managers, professionals and technicians – 3.3 percent
• Clerks, service and sales workers – 3.0 percent
• Other occupations – 3.8 percent.

Across all occupation groups, annual increases ranged from 2.3 percent (for salespersons, demonstrators and models) to 5.9 percent for teaching professionals.

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Teaching professionals’ salary and wage rates (including overtime) increased 5.9 percent in the year to the March 2009 quarter. This followed revised rises of 6.8 percent in the year to the December 2008 quarter (the largest annual increase since the series began in the December 1992 quarter), and 6.6 percent in the year to the September 2008 quarter. In the March 2009 quarter, salary and wage rates for teaching professionals increased 0.5 percent, following increases of 0.2 percent in the December 2008 quarter, and 3.2 percent in the September 2008 quarter. Collective employment agreements coming into effect was the main reason provided by respondents for the latest quarterly increase.

Salary and wage rates (including overtime) for health professionals increased 5.1 percent in the year to the March 2009 quarter. This followed increases of 5.0 percent and 5.1 percent in the years to the December 2008 and September 2008 quarters, respectively. In the March 2009 quarter, salary and wage rates (including overtime) for health professionals increased 1.3 percent. This followed increases of 0.5 percent in the December 2008 quarter and 1.6 percent in the September 2008 quarter. The main reason respondents provided for the latest quarterly increase was the impact of collective employment agreements coming into effect. 

In the year to the March 2009 quarter, salary and wage rates (including overtime) for professionals (the major occupation group that includes both teaching professionals and health professionals) increased 4.4 percent. This followed a revised record increase (since the series began in the December 1992 quarter) of 4.7 percent in the year to the December 2008 quarter and a revised rise of 4.6 percent in the year to the September 2008 quarter. In the March 2009 quarter, salary and wage rates (including overtime) for professionals increased 0.7 percent, matching the 0.7 percent revised increase recorded in the December 2008 quarter, but down from the 1.8 percent revised increase recorded in the September 2008 quarter. Collective employment agreements coming into effect was the most common reason provided by respondents to explain the latest quarterly increase, reflecting the effect collective employment agreements have on both teaching and health professionals.

 

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Distribution of pay rates

In the year to the March 2009 quarter, 60 percent of salary and ordinary time wage rates in the surveyed sample increased, which is identical to the revised 60 percent that increased in the year to the December 2008 quarter. In the March 2009 quarter, 13 percent of salary and ordinary time wage rates in the survey sample rose, down from 15 percent in the December 2008 quarter.

Annually, 9 percent of salary and ordinary time wage rates increased by no more than 3 percent, 29 percent by more than 3 percent but no more than 5 percent, and 22 percent increased by more than 5 percent in the year to the March 2009 quarter.

Sixty-four percent of overtime wage rates increased in the year to the March 2009 quarter, while 36 percent were unchanged.

Surveyed respondents were asked to give reasons for each movement in pay rates. In the year to the March 2009 quarter, 42 percent of increases in salary and ordinary time wage rates were, at least in part, to reflect the cost of living; 32 percent were due to collective employment agreements coming into effect; 28 percent were to match market rates; 12 percent were to retain staff; and 2 percent were to attract staff.

Median and mean increases

The median (ie middle) increase for all surveyed salary and ordinary time wage rates that rose in the year to the March 2009 quarter was 4.2 percent, down from a revised 4.4 percent in the year to the December 2008 quarter.

The median increase for the March 2009 quarter was 4.0 percent, matching the median increase for the previous three quarters.

The mean increase for all surveyed salary and ordinary time wage rates that rose in the year to the March 2009 quarter was 5.7 percent, down from a revised 5.9 percent in the year to the December 2008 quarter.

In the March 2009 quarter, the mean increase was 4.5 percent, down from the 4.8 percent mean increase recorded in the December 2008 quarter.

Analytical unadjusted series

The analytical unadjusted series is an additional measure that is intended to complement the official LCI and QES indicators. Like the LCI, the unadjusted series measures changes in salary and wage rates for a fixed quantity of labour, but reflects quality change in addition to price change.

Unadjusted salary and ordinary time wage rates increased 5.2 percent in the year to the March 2009 quarter. This is down from the revised increases of 5.6 percent in both the year to the December 2008 quarter and the year to the September 2008 quarter. In the March 2009 quarter, unadjusted salary and ordinary time wage rates rose 0.8 percent. This is down from the revised 1.4 percent increase in the December 2008 quarter.

Private sector unadjusted salary and ordinary time wage rates increased 5.0 percent in the year to the March 2009 quarter, following a 5.4 percent increase in the year to the December 2008 quarter. Unadjusted salary and ordinary time wage rates in the private sector rose 0.8 percent in the March 2009 quarter, down from a 1.3 percent rise in the December 2008 quarter.

Unadjusted salary and ordinary time wage rates recorded larger increases than adjusted salary and ordinary time wage rates, both for the year to the March 2009 quarter and in the March 2009 quarter.

Education revisions

Improved historical information on changes to central government primary and secondary school education pay rates has been incorporated back to the September 2005 quarter, resulting in revisions to some previously published figures. The main impact was the reflection of increases in education pay rates paid in 2008 that were not previously shown in the LCI. There are also changes to some quarters during 2005–07, where increases in education pay rates were incorporated in the LCI, but not in the correct quarter.

The historical time series affected are those for the central government sector, public sector and all sectors combined. The private sector series are not affected.

The main impact on the overall indexes of all salary and wage rates (including overtime) for the public sector and all sectors combined was a rise in the level of annual increases for the June, September and December 2008 quarters. Annual increases for all salary and wage rates (including overtime) for all sectors combined now peak at a revised 4.0 percent for the year to the September 2008 quarter, compared with an originally published increase of 3.6 percent.

Revised index numbers are flagged with the symbol 'R' in the tables attached to this release.

The labour cost index, education revisions table gives the originally published and revised index numbers, quarterly percentage changes and annual percentage changes from the September 2005 quarter to the December 2008 quarter. This table can be downloaded in Excel format from the tables section of this release. The revised index numbers are also available on Infoshare (click on Browse, then Work income and spending, then Labour Cost Index).

For technical information contact:
Nicola Argyle or Carrone Conroy
Wellington 04 931 4600
Email: info@stats.govt.nz

Next release ...

Labour Cost Index (Salary and Wage Rates): June 2009 quarter will be released on
4 August 2009.