23rd November 2004

Keeping The Wage Bill Down

Despite the tight labour market, many New Zealand employers are trying very hard to keep their wage bills down.

The Mercer New Zealand Remuneration Review shows that for the period 2002 - 2004, remuneration for people staying in the same job increased 5.9 per cent, while the average remuneration increase across the board was only 1.3 per cent.

John Ellen, Mercer Principal, said these figures indicate that employees may be moving between jobs with the same employer or between employers for development opportunities but on lower remuneration than the previous employee.

"Traditionally in a tight labour market we would expect to see an escalation in wage and salary levels, however in the current climate employers are being forced to offer positions to candidates which represents a growth opportunity rather than the employer's traditional practice of recruiting candidates who have already proven performance at that job level."

In other words, people with less experience than usual are being taken on, at lower wages.

Mr Ellen said IT and accounting roles were the only job families in which higher salaries were being offered compared to the trend.

An article in Stuff today also highlights the desire of NZ employers to keep wage bills down. An Auckland property developer is causing concern in trade union circles by attempting to bring in 85 Chinese migrant workers for a big construction project in Auckland.

Ray Bianchi of the Amalgamated Workers Union said

"There may be a shortage but that is because construction companies are not offering the workers enough in wages and conditions."

Mr Bianchi said there would not be a labour shortage if New Zealand pay rates were comparable with Australia's as expat New Zealanders would return.

Council of Trade Unions secretary Carol Beaumont said there would be concern if cheap labour was being brought in to maintain a low-paid local workforce.

The Reserve Bank of New Zealand continues to monitor wages closely for signs of inflationary pressure.