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

Overview

The labour cost index (LCI) showed an increase of 2.1 percent from the September 2008 quarter to the September 2009 quarter (ie the year to the September 2009 quarter). This annual increase is the lowest recorded in the series since a 2.1 percent increase in the year to the December 2002 quarter, and is down from a 2.8 percent increase in the year to the June 2009 quarter. In comparison, the Quarterly Employment Survey (QES) average hourly earnings increased 4.9 percent in the year to the September 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 0.5 percent in the September 2009 quarter, following increases of 0.3 percent in the June 2009 quarter and 0.6 percent in the March 2009 quarter.

Salary and ordinary time wage rates increased 2.1 percent in the year to the September 2009 quarter, the lowest annual increase recorded in the series since a 2.1 percent rise in the year to the December 2002 quarter. The latest annual increase follows rises of 2.9 percent and 3.4 percent in the years to the June 2009 and March 2009 quarters, respectively. In the September 2009 quarter, salary and ordinary time wage rates increased 0.5 percent, up from a 0.3 percent increase in the June 2009 quarter and down from a 0.6 percent increase in the March 2009 quarter.

Overtime wage rates increased 2.8 percent in the year to the September 2009 quarter, following a 3.5 percent increase in the year to the June 2009 quarter. In the September 2009 quarter, overtime wage rates increased 0.5 percent, following an identical rise of 0.5 percent in the June 2009 quarter.

In the year to the September 2009 quarter, the mean increase for all surveyed salary and ordinary time wage rates that rose was 4.8 percent, down from 5.2 percent in the year to the June 2009 quarter. In the September 2009 quarter, the mean increase for all surveyed salary and ordinary time wage rates that rose was 3.8 percent, down from 3.9 percent in the June 2009 quarter.

Sector movements

Salary and wage rates (including overtime) for the public sector increased 2.9 percent in the year to the September 2009 quarter, the lowest annual increase recorded in the series since a 2.6 percent rise in the year to the December 2007 quarter. The latest annual increase follows rises of 3.6 percent and 4.3 percent in the years to the June 2009 and March 2009 quarters, respectively. The increase in the year to the September 2009 quarter was a result of a 2.3 percent increase in the local government sector and a 3.0 percent rise in the central government sector.

In the September 2009 quarter, public sector salary and wage rates (including overtime) increased 1.1 percent. This followed rises of 0.4 percent in the June 2009 quarter and 0.6 percent in the March 2009 quarter.

Salary and wage rates (including overtime) for the private sector increased 2.0 percent in the year to the September 2009 quarter. This annual increase is the lowest recorded in the series since a 2.0 percent rise in the year to the December 2002 quarter. The latest annual increase follows rises of 2.7 percent and 3.1 percent in the years to the June 2009 and March 2009 quarters, respectively.

For the private sector, salary and wage rates (including overtime) increased 0.4 percent in the September 2009 quarter, up from a 0.3 percent increase in the June 2009 quarter, but down from the 0.6 percent rise in the March 2009 quarter.

Industry movements

In the September 2009 quarter, the highest Australian and New Zealand Standard Industrial Classification 2006 (ANZSIC06)-based industry increases in salary and wage rates (including overtime) were:

• education and training – up 2.3 percent
• local government administration – up 1.1 percent.
• mining – up 0.9 percent.

As the ANZSIC06-based series began in the June 2009 quarter, annual movements are not available.

In the year to the September 2009 quarter, the highest ANZSIC96-based industry group increases in salary and wage rates (including overtime) were:

• education – up 3.7 percent
• health and community services – up 3.4 percent
• personal and other services – up 3.4 percent.

Salary and wage rates (including overtime) for the education industry increased 3.7 percent in the year to the September 2009 quarter. This followed rises of 4.0 percent, 5.7 percent, and 6.3 percent in the years to the June 2009, March 2009, and December 2008 quarters, respectively. In the September 2009 quarter, salary and wage rates (including overtime) for the education industry increased 2.4 percent. This quarterly increase is the largest for the education industry since a 2.7 percent increase in the September 2008 quarter. The latest quarterly increase is up from rises of 0.2 percent and 0.7 percent in the June 2009 and March 2009 quarters, respectively. Collective employment agreements coming into effect was the main reason provided by respondents for the latest quarterly rise. Primary and secondary teachers, and principals received increases in pay rates of around 4 percent effective from 1 July 2009, and this contributed to the increase for the education industry in the September 2009 quarter.

In the year to the September 2009 quarter, salary and wage rates (including overtime) for the health and community services industry increased 3.4 percent, following consecutive increases of 4.4 percent in the years to both the June 2009 and the March 2009 quarters. The latest annual increase is the lowest for the health and community services industry since an identical rise of 3.4 percent in the year to the September 2007 quarter. In the September 2009 quarter, salary and wage rates (including overtime) for the health and community services industry increased 0.7 percent. This is down from consecutive quarterly increases of 1.1 percent in both the June 2009 and March 2009 quarters. Additionally, the latest quarterly increase for this industry is only the third recorded below 1 percent in the past ten quarters. The main reason provided by respondents for the latest quarterly increase was the impact of collective employment agreements coming into effect.

Salary and wage rates (including overtime) for the personal and other services industry increased 3.4 percent in the year to the September 2009 quarter. This is up from the 3.3 percent increase recorded in the year to the June 2009 quarter, but down from the 3.5 percent rise in the year to the March 2009 quarter. In the September 2009 quarter, salary and wage rates (including overtime) rose 0.6 percent for this industry. This followed rises of 0.5 percent in the June 2009 quarter, and 1.5 percent in the March 2009 quarter. Reflecting the increased cost of living was the main reason given by respondents to explain the latest quarterly rise.

Occupation movements

In the September 2009 quarter, the highest Australian and New Zealand Standard Classification of Occupations (ANZSCO)-based occupation series increases in salary and wage rates (including overtime) were:

• education professionals – up 2.7 percent
• professionals – up 1.0 percent
• mobile plant operators – up 0.8 percent
• health professionals – up 0.7 percent.

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

In the year to the September 2009 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 2.3 percent
• clerks, service and sales workers – up 1.9 percent
• other occupations – up 2.3 percent.

Across all NZSCO99-based occupation groups, annual increases ranged from 1.4 percent (for legislators, administrators, and managers) to 4.3 percent (for health professionals). Teaching professionals (up 3.9 percent) and professionals (up 3.2 percent) also showed large movements.

Salary and wage rates (including overtime) increased 4.3 percent in the year to the September 2009 quarter for the health professionals occupation group. This followed increases of 5.1 percent in both the year to the June 2009 quarter and the year to the March 2009 quarter. In the September 2009 quarter, salary and wage rates (including overtime) increased 0.9 percent for health professionals, down from a 1.6 percent increase in the June 2009 quarter, and a 1.3 percent increase in the March 2009 quarter. The main reason respondents gave for the latest quarterly rise was as a result of collective employment agreements coming into effect.

Teaching professionals' salary and wage rates (including overtime) increased 3.9 percent in the year to the September 2009 quarter. This is down from both a 4.2 percent increase in the year to the June 2009 quarter, and a 5.9 percent increase in the year to the March 2009 quarter. In the September 2009 quarter, salary and wage rates (including overtime) increased 2.9 percent for teaching professionals. This is up from the previous three quarterly movements: a 0.2 percent increase in the June 2009 quarter, a 0.5 percent increase in the March 2009 quarter, and a 0.2 percent increase in the December 2008 quarter. The main reason respondents gave for the latest quarterly increase was as a result of collective employment agreements coming into effect. Increases in pay rates for primary and secondary school teachers, and principals, which came in to effect on 1 July 2009 had an upward impact on the teaching professionals occupation group this quarter.

Professionals' (which is the broad occupation group that includes both teaching professionals and health professionals) salary and wage rates (including overtime) increased 3.2 percent in the year to the September 2009 quarter. This followed increases of 3.8 percent and 4.4 percent in the year to the June 2009 quarter, and the year to the March 2009 quarter, respectively. In the September 2009 quarter, salary and wage rates (including overtime) increased 1.2 percent for professionals. This is up from a 0.5 percent increase in the June 2009 quarter, and a 0.7 percent increase in the March 2009 quarter. The main reason respondents gave for the latest quarterly increase was as a result of collective employment agreements coming into effect.

Distribution of pay rates

In the year to the September 2009 quarter, 47 percent of salary and ordinary time wage rates in the surveyed sample increased, down from 55 percent in the year to the June 2009 quarter. The latest annual proportion that increased is the lowest since the year to the December 2000 quarter, when the proportion was also 47 percent. In the September 2009 quarter, 15 percent of salary and ordinary time wage rates in the surveyed sample rose, up from 10 percent in the June 2009 quarter.

Annually, 11 percent of salary and ordinary time wage rates increased by no more than 3 percent, 23 percent by more than 3 percent but no more than 5 percent, and 13 percent increased by more than 5 percent in the year to the June 2009 quarter.

One percent of salary and ordinary time wage rates in the surveyed sample decreased in the year to the September 2009 quarter, the first time a fall has been recorded since the year to the June 1999 quarter, when 1 percent of salary and ordinary time wage rates also fell. ANZSIC06-based industry indexes for printing, and furniture and other manufacturing recorded falls in the September 2009 quarter, reflecting drops in pay rates for these industries.

Fifty-three percent of overtime wage rates increased in the year to the September 2009 quarter, while 46 percent were unchanged.

Surveyed respondents were asked to give reasons for each movement in pay rates. In the year to the September 2009 quarter, 39 percent of increases in salary and ordinary time wage rates were, at least in part, to reflect the cost of living; 38 percent were due to collective employment agreements coming into effect; 24 percent were to match market rates; 9 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 September 2009 quarter was 4.0 percent, matching the 4.0 percent median increase in the year to the June 2009 quarter.

The median increase for the September 2009 quarter was 3.7 percent, up from the 3.6 percent median increase in the June 2009 quarter.

The mean increase for all surveyed salary and ordinary time wage rates that rose in the year to the September 2009 quarter was 4.8 percent, down from the previous mean increase of 5.2 percent. The mean increase in the year to the September 2009 quarter is the lowest since the June 2005 quarter, when the mean increase was 4.7 percent.

In the September 2009 quarter, the mean increase was 3.8 percent, the lowest since an identical mean increase in the December 2004 quarter. The latest mean increase follows a mean increase of 3.9 percent in the June 2009 quarter.---PDF BREAK---

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 3.8 percent in the year to the September 2009 quarter. This is down from the 4.6 percent increase in the year to the June 2009 quarter. In the September 2009 quarter, unadjusted salary and ordinary time wage rates rose 0.9 percent, up from the 0.6 percent increase in the June 2009 quarter.

Private sector unadjusted salary and ordinary time wage rates increased 3.7 percent in the year to the September 2009 quarter, following a 4.4 percent increase in the year to the June 2009 quarter. Unadjusted salary and ordinary time wage rates in the private sector rose 0.8 percent in the September 2009 quarter, up from a 0.6 percent rise in the June 2009 quarter.

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

Implementation of new classifications

This is the first publication using the updated 2006 version of the Australian and New Zealand Standard Industrial Classification (ANZSIC06) and the Australian and New Zealand Standard Classification of Occupations (ANZSCO).

ANZSIC06 and ANZSCO have been jointly developed by Statistics NZ and the Australian Bureau of Statistics to ensure that the classifications remain current and relevant, reflecting changes that have occurred in the structure and composition of industry and occupation. See Introducing ANZSIC 2006 and the classification and standards Occupation page on the Statistics New Zealand website (www.stats.govt.nz) for more information, including links to the structures and details of the new classifications.

With the introduction of ANZSIC06, Statistics NZ has also developed New Zealand Standard Industrial Output Categories (NZSIOC) to assist in the standardisation of outputs. See Introducing ANZSIC 2006 on the Statistics NZ website for more information. The LCI has been published at NZSIOC levels one and two.

The LCI (salary and wage rates) indexes on the old industry and occupation classifications were reweighted and released for the September 2008 quarter. As part of implementing the new industry and occupation classifications, new weights have been calculated using the following data sources:

• 2006 Census of Population and Dwellings information on the relative importance of occupations within each sector by industry group in terms of jobs, and, in some cases, wages
• Quarterly Employment Survey ANZSIC06 figures for the year to June 2009 on the relationship between full- and part-time paid employees, and figures for the June 2009 quarter on average earnings per job
• Business Frame (BF) 2009 information on the relative importance of industry groups within each sector of ownership
• pay rates surveyed in the Labour Cost Survey for the June 2009 quarter.

The sample of surveyed job descriptions has been refreshed to better reflect the structure of the ANZSIC06 classification. New positions representing about 3 percent of the expenditure weight have been added to the survey in ANZSIC06 industries that were under-represented in the old sample.

The new ANZSCO classification assigns occupations to one of five skill levels. A skill level refers to the level of skill that is typically required to competently perform the tasks of a particular occupation. Table 5.1 includes the LCI series based on skill level for all sectors combined. Movements for the private and public sector are not published in this release but are available on Infoshare.

The LCI has been re-expressed on a June 2009 quarter base (=1000). A June quarter has been chosen as the new index reference period because the indexes of non-wage labour costs and of all labour costs are only released for the June quarter of each year.

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 have not been linked to the old series. For example, the major occupational group 6 – agriculture and fishery workers – has been discontinued under NZSCO99. These occupations have been spread across a number of ANZSCO major groups: 1 – managers, 3 – technicians and trades workers, and 8 – labourers. The industry division L – property and business services under ANZSIC96 was also discontinued and mainly spread across rental, hiring, and real estate services (L), professional, scientific, and technical services (M), and administrative and support services (N) under ANZSIC06.

The indexes of all industries/occupations combined have been linked to the existing series and re-expressed on a June 2009 quarter base (=1000).

The ANZSIC06-based industry and ANZSCO-based occupation indexes have not been 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, occupation, and skill level appear in table 9.1, and those by industry appear in table 9.2.

For more details about the ANZSIC06 and ANZSCO implementation please see the 'Technical notes' section of this release.

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): December 2009 quarter will be released on
2 February 2010.