Labour Cost Index (Salary and Wage Rates): March 2010 quarter

Overview

The labour cost index (LCI) showed an increase of 1.5 percent in the year to the March 2010 quarter. This is a continuation of the steady decline in salary and wage rate (including overtime) growth from a peak of 4.0 percent in the year to the September 2008 quarter (the largest annual increase since the series began in the December 1992 quarter). The latest annual increase of 1.5 percent is the lowest since an identical increase in the year to the September 2000 quarter. In comparison, the Quarterly Employment Survey (QES) average total hourly earnings increased 2.1 percent in the year to the March 2010 quarter.

The QES average earnings statistics reflect not only changes in wages and salaries, but also compositional and other changes across and within the paid workforce. In contrast, the LCI measures changes in salary and wage rates for a fixed quantity and quality of labour input. Service increments, merit promotions, and changes to salary and wage rates relating to the performance of the individual employee are not shown in the LCI.

In the LCI, salary and wage rates (including overtime) increased 0.3 percent in the March 2010 quarter. This follows increases of 0.4 percent in the December 2009 quarter and 0.5 percent in the September 2009 quarter.

Salary and ordinary time wage rates increased 1.5 percent in the year to the March 2010 quarter, the lowest annual increase recorded in the series since a 1.5 percent increase in the year to the September 2000 quarter. The latest annual increase follows increases of 1.8 percent and 2.1 percent in the years to the December 2009 quarter and the September 2009 quarter, respectively. In the March 2010 quarter, salary and ordinary time wages rates increased 0.3 percent, down from an increase of 0.4 percent in the December 2009 quarter and 0.5 percent in the September 2009 quarter.

Overtime wage rates increased 1.9 percent in the year to the March 2010 quarter. This follows a 2.2 percent increase in the year to the December 2009 quarter and a 2.8 percent increase in the year to the September 2009 quarter. The latest annual increase is the lowest since a 1.7 percent increase in the year to the June 2001 quarter. In the March 2010 quarter, overtime wage rates increased 0.5 percent, up from a 0.4 percent increase in the December 2009 quarter, and identical to a 0.5 percent increase in the September 2009 quarter.

In the year to the March 2010 quarter, the mean increase for all surveyed salary and ordinary time wage rates that increased was 3.9 percent, down from 4.4 percent in the year to the December 2009 quarter. In the March 2010 quarter, the mean increase for all surveyed salary and ordinary time wage rates that increased was 3.1 percent, down from 3.3 percent in the December 2009 quarter.

Sector movements

Salary and wage rates (including overtime) for the public sector increased 2.3 percent in the year to the March 2010 quarter. This is the lowest annual increase recorded for the public sector since an identical increase of 2.3 percent in the year to the June 2002 quarter. The latest annual increase is down from a 2.4 percent increase in the year to the December 2009 quarter and a 2.9 percent increase in the year to the September 2009 quarter. The increase in the year to the March 2010 quarter was a result of a 2.4 percent increase and a 2.1 percent increase in salary and wage (including overtime) rates in central government and local government, respectively.

In the March 2010 quarter, salary and wage rates (including overtime) for the public sector increased 0.5 percent, following a 0.3 percent increase in the December 2009 quarter, and a 1.1 percent increase in the September 2009 quarter. In the March 2010 quarter, the increase was a result of a 0.5 percent increase in the central government sector and a 0.3 percent increase in the local government sector.

Private sector salary and wage rates (including overtime) rose 1.3 percent in the year to the March 2010 quarter, following a 1.6 percent increase in the year to the December 2009 quarter and a 2.0 percent increase in the year to the September 2009 quarter. The latest annual increase is the lowest since an identical increase of 1.3 percent in the year to June 2000 quarter.

In the March 2010 quarter, the private sector salary and wage rates (including overtime) recorded an increase of 0.3 percent, identical to the increase in the December 2009 quarter, but down from a 0.4 percent increase in the September 2009 quarter.

Industry movements

In the March 2010 quarter, the highest Australian and New Zealand Standard Industrial Classification 2006 (ANZSIC06)-based industry increases in salary and wage rate (including overtime) included:

• non-metallic mineral product manufacturing – up 0.6 percent
• transport equipment, machinery, and equipment mfg – up 0.6 percent. 

As the ANZSICO06-based series began in the June 2009 quarter, annual movements are not available.

In the year to the March 2010 quarter, the highest ANZSIC96-based industry increases in salary and wage rates (including overtime) were:

• education – up 3.2 percent
• health and community services – up 2.6 percent.

Salary and wage rates (including overtime) for the education industry increased 3.2 percent in the year to the March 2010 quarter. This follows rises of 3.4 percent, 3.7 percent, and 4.0 percent in the years to the December 2009, September 2009, and June 2009 quarters, respectively. The latest annual increase is the lowest since a 2.5 percent increase in the year to the March 2008 quarter. In the March 2010 quarter, salary and wage rates (including overtime) increased 0.5 percent. This is up from a 0.1 percent increase in the December 2009 quarter, but down from a 2.4 percent increase in the September 2009 quarter. The main reason respondents gave for the latest quarterly increase was as a result of collective employment agreements coming into effect, partly due to increases for some tertiary teaching professionals.

In the year to the March 2010 quarter, salary and wage rates (including overtime) for the health and community services industry rose 2.6 percent. This is lower than a 3.3 percent increase in the year to the December 2009 quarter, a 3.4 percent increase in the year to the September 2009 quarter, and a 4.4 percent increase in the year to the June 2009 quarter. The latest annual increase is the lowest since an identical increase in the year to the September 2004 quarter. In the March 2010 quarter, salary and wage rates (including overtime) for the health and community services industry rose 0.4 percent. This is the same as the increase in the December 2009 quarter, but down from a 0.7 percent increase in the September 2009 quarter, and a 1.1 percent increase in the June 2009 quarter. Collective employment agreements coming into effect in the March 2010 quarter was the main reason provided by respondents for salary and wage rate increases.

Occupation movements

In the March 2010 quarter, the highest Australian and New Zealand Standard Classification of Occupations (ANZSCO)-based occupation increases in salary and wage rates (including overtime) included:

• community and personal service workers – up 0.7 percent
• general clerical workers – up 0.6 percent.

As the ANZSCO-based series began in the June 2009 quarter, annual movements are not available.

In the year to the March 2010 quarter, overall annual increases in salary and wage rates (including overtime) for the three broad New Zealand Standard Classification of Occupations 1999 (NZSCO99)-based occupation groups were:

• managers, professionals, and technicians – up 1.6 percent
• clerks, service, and sales workers – up 1.5 percent
• other occupations – up 1.6 percent.

Across all NZSCO99-based occupation groups, annual increases ranged from 0.8 percent (for legislators, administrators, and managers) to 3.7 percent (for teaching professionals). Health professionals showed an increase of 3.1 percent in the year to the March 2010 quarter.

In the year to the March 2010 quarter, salary and wage rates (including overtime) for the teaching professionals group rose by 3.7 percent. This followed increases of 3.6 percent, 3.9 percent, and 4.2 percent in the years to the December 2009, September 2009, and June 2009 quarters, respectively. In the March 2010 quarter, salary and wage rates (including overtime) increased 0.5 percent for teaching professionals, following no change in the December 2009 quarter, and down from a 2.9 percent increase in the September 2009 quarter. The main reason respondents gave for the latest quarterly rise was as a result of collective employment agreements coming into effect.

Health professionals’ salary and wage rates (including overtime) increased 3.1 percent in the year to the March 2010 quarter. This is down from a 4.1 percent increase in the year to the December 2009 quarter, a 4.3 percent increase in the year to the September 2009 quarter, and a 5.1 percent increase in the year to the June 2009 quarter. The latest annual movement is the lowest since a 2.5 percent increase in the year to the March 2008 quarter. In the March 2010 quarter, salary and wage rates (including overtime) for health professionals increased by 0.3 percent. This is down from increases of 0.4 percent, 0.9 percent, and 1.6 percent in the December 2009, September 2009, and June 2009 quarters, respectively. The latest quarterly increase is the lowest since a 0.1 percent increase in the June 2007 quarter. Collective employment agreements coming into effect was the main reason provided by respondents for the latest quarterly increase.

Professionals’ (which is the broad occupation group that includes both teaching professionals and health professionals) salary and wage rates (including overtime) increased 2.4 percent in the year to the March 2010 quarter. This followed increases of 2.7 percent, 3.2 percent, and 3.8 percent in the years to the December 2009, September 2009, and June 2009 quarters, respectively. The latest annual movement is the lowest since a 2.4 percent increase in the year to the September 2004 quarter. In the March 2010 quarter, professionals’ salary and wage rates (including overtime) increased by 0.4 percent. This is up from a 0.2 percent increase in the December 2009 quarter but down from a 1.2 percent increase in the September 2009 quarter. Collective employment agreements coming into effect were the main reasons provided by respondents for the latest quarterly increase.

Distribution of pay rates

In the year to the March 2010 quarter, 43 percent of salary and ordinary time wage rates in the surveyed sample increased, down from 44 percent in the year to the December 2009 quarter. The latest annual proportion that increased is the lowest since an identical proportion in the year to the September 1999 quarter. In the March 2010 quarter, 11 percent of salary and ordinary time wage rates in the surveyed sample rose, down from 12 percent in the December 2009 quarter. This is also lower than the 13 percent proportion that increased in the March 2009 quarter.

Annually, 19 percent of salary and ordinary time wage rates increased by no more than 3 percent, 17 percent by more than 3 percent but not more than 5 percent, and 8 percent increased by more than 5 percent in the year to the March 2010 quarter.

One percent of salary and ordinary time wage rates in the surveyed sample decreased in the year to the March 2010 quarter, following the same proportion of 1 percent that decreased in both the years to the December 2009 and September 2009 quarters.

Fifty-two percent of overtime wage rates increased in the year to the March 2010 quarter, while 48 percent were unchanged.

Surveyed respondents were asked to give reasons for each movement in pay rates. In the year to the March 2010 quarter, 41 percent of increases in salary and ordinary time wage rates were, at least in part, due to collective employment agreements coming into effect; 39 percent were to reflect the cost of living; 21 percent were to match market rates; 8 percent were to retain staff; and 1 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 2010 quarter was 3.3 percent, down from a 3.7 percent median increase in the year to the December 2009 quarter. The median increase in the year to the March 2010 quarter is the lowest since a 3.2 median increase in the year to the June 2005 quarter.

The median increase for the March 2010 quarter was 2.5 percent, down from a 2.9 percent median increase in the December 2009 quarter. The latest quarterly median increase is the lowest since an identical median increase in the December 2000 quarter.

The mean increase for all surveyed salary and ordinary time wage rates that rose in the year to the March 2010 quarter was 3.9 percent, down from the previous mean increase of 4.4 percent in the year to the December 2009 quarter. The mean increase in the year to the March 2010 quarter is the lowest since a 3.8 percent increase in the year to the June 2001 quarter.

In the March 2010 quarter, the mean increase was 3.1 percent, the lowest since the September 2000 quarter, when the mean increase was 3.0.

 

 

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 2.5 percent in the year to the March 2010 quarter. This is down from a 2.9 percent increase in the year to the December 2009 quarter. The latest annual increase is the lowest for all sectors combined since the series began in the March 1995 quarter. In the March 2010 quarter, unadjusted salary and ordinary time wage rates rose 0.5 percent, identical to the December 2009 quarter.

Private sector unadjusted salary and ordinary time wage rates increased 2.5 percent in the year to the March 2010 quarter, following a 2.7 percent increase in the year to the December 2009 quarter. The latest annual increase is the lowest for the private sector since the series began in the September 1998 quarter. Unadjusted salary and ordinary time wage rates in the private sector rose 0.7 percent in the December 2009 quarter, up from a 0.4 percent rise in the December 2009 quarter.

 

For technical information contact:
Ludeth Mariposa or Dion Gamperle
Wellington 04 931 4600
Email: info@stats.govt.nz

Implementation of new classifications

The 2006 version of the Australian and New Zealand Standard Industrial Classification (ANZSIC06) and the Australian and New Zealand Standard Classification of Occupations (ANZSCO) were implemented into the LCI (salary and wage rates) in the September 2009 quarter.

The LCI was re-expressed on a base of the June 2009 quarter (=1000). The sample of surveyed job descriptions was refreshed to better reflect the structure of the ANZSIC06 classification. New positions representing about 3 percent of the expenditure weight were added to the survey in ANZSIC06 industries that were under-represented in the old sample.

Official industry and occupation movements for the LCI (salary and wage rates) are those of the ANZSIC06 and ANZSCO series from the September 2009 quarter (that is, for the September 2009 quarter compared with the June 2009 quarter) onwards, and of the ANZSIC96-based and NZSCO-based series up to the June 2009 quarter inclusive.

As there is a high level of discontinuity between the old and new occupation and industry breakdowns, the new series were not linked to the old series. The indexes of all industries/occupations combined were linked to the existing series and re-expressed on a base of the June 2009 quarter (=1000).

The ANZSIC06-based industry and ANZSCO-based occupation indexes were not backcast further than the June 2009 quarter. However, the LCI (salary and wage rates) series on the old classifications will continue to be published until the June 2010 quarter, providing a year-long overlap. These results appear in tables 10.1,10.2, 10.3, 11.1, 11.2, 11.3, 12.1, 12.2, 12.3, 13.1, 13.2, 13.3, 14.1, and 14.2 (previously numbered 2.1, 2.2, 2.3, 3.1, 3.2, 3.3, 4.1, 4.2, 4.3, 5.1, 5.2, 5.3, 9.1, and 9.2, respectively).

The new base expenditure weights by sector, cost, and occupation appear in table 9.1, and those by industry appear in table 9.2.

The next LCI (all labour costs) release, for the June 2010 quarter, will be published under both industry classifications, ANZSIC06 and ANZSIC96. From the June 2011 quarter onwards, only the new ANZSIC06 classification will be released.

For technical information contact:
Claudia Schroeder or Chris Pike
Wellington 04 931 4600
Email: info@stats.govt.nz

Next release ...

Labour Cost Index (Salary and Wage Rates): June 2010 quarter will be released on
3 August 2010.