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‘Now is a good time to ask for a pay rise’

Employees may now have the best opportunity they’ve had for some time to negotiate a pay rise.

The labour market is under increased pressure as businesses face increased demand and a lack of overseas workers.

It has been suggested that the country is approaching “maximum sustainable employment” – the point where any further increases in employment create increased inflation risks.

NZIER’s Quarterly Survey of Business Opinion showed businesses reported the most difficult period to find both skilled and unskilled on record. Job “churn” is reported to be at the highest level since 1973, as businesses fill vacancies by poaching staff from other firms.


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Infometrics economist Brad Olsen said it was likely pay increases would continue, they would not cover every sector. The public sector is still facing a pay freeze. “There is pressure across the wider labour market now for wage rises.”

He said there were now four industries paying more than an average $40 an hour – financial and insurance services; electricity, gas, water and waste services, info media and telecoms, and public administration and safety.

Six industries paid below the average, and two had noticeably lower wages.

Accommodation and food services workers earned the least of all industries, with $24.22/hour on average – just 70 per cent of the economy-wide average. Retail trade workers earned $25.62/hour (74 per cent of the economy-wide average), before a considerable jump up to the third-lowest industry (arts, recreation, and other services, at 91 per cent of the economy-wide average).

Olsen said the rate of pay was likely to be a factor in which industries continued to struggle to hire workers in future.

Construction pays well, which helps it attract workers.


Construction pays well, which helps it attract workers.

“If workers are feeling there is a bit more choice out there, the sectors paying more are more likely to get them first punch.”

He said that would be a factor in the strong jobs growth seen in construction, which pays more than others that might be alternatives, such as hospitality, retail and transport.

“There’s probably more of a bias to people going into construction – construction has been going strongly anyway but job numbers out the other day showed 6 per cent per annum growth, the strongest growing industry in the country.

“Particularly as you get a bit higher up the list there’s more specific requirements for various jobs which does limit how quickly people can shift into an industry but it gives a signal into the future where the money sits and therefore what people might opt for.

“There seems to be a lot more opportunity out there for workers, It’s a strong environment across the economy.”

While it might be difficult for some businesses, he said it was a good problem to have, compared to where some people feared the economy could end up.

“There are challenges for some people but for others, particularly workers, there’s opportunity.”

Workers could also negotiate things like more annual leave or flexible working arrangements, he said.

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