Fast Facts

Minimum wage pushes up private sector pay rates

The rise in the minimum wage helped lift private sector salary and wage rates 2.1 percent in the June 2018 year, Stats NZ said.

On 1 April 2018, the Government raised the minimum wage by 75 cents to $16.50 an hour. The labour cost index (LCI) salary and wage rates (including overtime) rose 0.5 percent for the June 2018 quarter and increased 1.9 percent for the year to June 2018. The minimum wage will continue to rise in increments, reaching $20.00 per hour by 2021.

“Seventeen percent of all surveyed salary and wages showed a rise this quarter,” business prices delivery manager Sarah Johnson said. “Around 3 percent of all wages were influenced at least partly by the minimum wage increase.”

If wages affected by the minimum wage had remained constant in the June 2018 quarter, LCI salary and wage rates would have increased 0.4 percent over the quarter, and 1.8 percent for the year.

Annually, private sector salary and wage rates (including overtime) increased 2.1 percent. Along with the rise in minimum wage this quarter, the Care and Support Workers (Pay Equity) Settlement Act 2017, which came into effect on 1 July 2017, continues to contribute to higher annual wage rates in the private sector.

In contrast, public sector salary and wage rates (including overtime) increased 1.4 percent for the June 2018 year. Pay negotiations for both nurses and teachers continue, contributing to the weaker wage growth in the public sector for the year to June 2018.

The impact of the minimum wage change was most noticeable in the retail trade, and accommodation and food services industries, increasing 0.9 and 1.1 percent, respectively, for the June 2018 quarter. It also affected occupations such as clerical and administrative workers, labourers, and sales workers.

The greatest contributors to quarterly wage increases in the quarterly employment survey came from some of the lowest-paying industries. Average hourly earnings for accommodation and food services, and retail trade increased 2.1 and 1.6 percent, respectively, for the June 2018 quarter.

Source: Stats NZ

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