Full-time employment extends slide amid slower wage growth

Tuesday 3rd November 2009

The number of people in full-time employment continued to decline in the three months through September as the effects of the recession flow into the workforce, while wage growth chalked up its smallest gain in almost seven years.

The number of full-time equivalent employees shrank 1% in the third quarter to 1.29 million and has fallen 3.5% in the past year, according to the Quarterly Employment Survey released by Statistics New Zealand. The number of seasonally adjusted total paid hours edged up 0.2% to 49 million and is down 3% from September 2008.

The Household Labour Force Survey out on Thursday is expected to show unemployment rose to 6.4% during this period, and economists are beginning to pare back their expectations on how high the jobless rate will go. The Reserve Bank predicts unemployment will go as high as 7% early next year. Employment is often said to be a lagging effect from an economic downturn, and even though the economy climbed out of recession in the second quarter, it will probably continue to be felt well into next year.

"Continued decline in wage growth reinforces that the recession is still exerting some downward pressure on inflation," said Nick Tuffley, chief economist at ASB. "Softness in the labour market will continue to suppress wage growth in the short term but as hiring resumes wage restraint will start to ebb."

Salaries and ordinary time wages grew 0.5% in the quarter and are up 2.1%, according to the labour cost index, its slowest annual increase since December 2002. The public sector continued to lead wage growth, climbing 1.1% in the quarter and 2.9% in the year. Private sector wages gained 0.4% in the quarter and 1.9% since September last year.

About 47% of salary and ordinary time wage earners surveyed by the government received higher pay in the quarter, down from 55% in the previous quarter and the lowest annual proportion since December 2000.

Filled jobs, which surveys all full- and part-time employees as well as working owner-operators, shrank 0.8% to 1.66 million in the three months ended Sept. 30, and has declined 2.6% in the past 12 months.

Seasonally adjusted total gross earnings climbed 1.8% to $1.244 billion and has increased 1.6% in the past year.

Businesswire.co.nz

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