The red hot labour market is set to deliver another record low unemployment rate and the strongest lift in wages in more than a decade.
Workers are in demand throughout the country. Photo: 123rf.com
Official numbers for the three months ended June are due this week, and are expected to confirm what the surveys and anecdotes have been saying for months – workers are hard to find, forcing a lift in wages to attract or hold on to staff.
Estimates for the jobless rate range between 2.8 percent and 3.1 percent from the current record low of 3.2 percent, with one measure of wages rising at an annual rate of more than 5.5 percent.
“The demand for workers remains red-hot, and with fewer Omicron disruptions in the quarter, we expect to see a lift in the number of workers,” Westpac acting chief economist Michael Gordon said.
Unemployment is defined as those actively seeking work, while underutilisation includes those wanting to work more hours or who could work but are not actively seeking a job.
The economy is expected to have added as many as 10,000 jobs during the quarter, backing the view that the tightness in the labour market is not the shortage of jobs but of workers.
Analysts will be looking at some of the lesser numbers for a better steer on the market, including the number of hours worked and jobs filled, which would show the disruption from illness and other absenteeism.
Recent surveys have businesses reporting the shortage of labour their number one problem, while firms have shown their need for labour with continued positive employment intentions.
Wages may have risen at the highest rate in a decade. Photo: 123RF
The scarcity of workers is also expected to be reflected by solid growth in wages during the quarter as businesses offer top dollars to lure or retain staff.
ASB senior economist Mark Smith said some of the chunkiest numbers to be released would be for wages, which have probably risen at the highest level in a decade but still lag inflation of 7.3 percent.
There are several measures of wages, the labour cost index which reflects the cost of a given unit of labour, which is expected to rise about 3.2 percent for the year, while the quarterly employment survey, reflecting wages being paid is likely to have risen at an annual rate of close to 6 percent.
“Risks are skewed towards wage inflation picking up in 2022 as workers seek compensation for steeply-rising living costs, potentially kicking off a wage price spiral that the RBNZ needs to act decisively to stamp out,” Smith said.
Wages are a key factor in domestically generated inflation and thus a key target for the Reserve Bank’s rate rise policy to bring inflation back under control.
ANZ chief economist Sharon Zollner said the strength of wage rises would not be ignored and most likely ensure three more 50 basis point rises in the official cash rate to 4 percent by the end of the year.
“For the RBNZ, good news will be bad news… They’re aiming to put the inflation genie back in the bottle – and every incremental tightening that we see in the labour market makes that job harder.”
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Unemployment has stayed at a record low of 3.2 percent, while wages rose more than 3 percent compared to a year ago.
Restaurant owners are hitting back after Minister of Immigration Michael Wood said they should offer better conditions and pay if they want to attract staff.
Data from Trade Me for the three months ended June showed the nationwide average salary increased by 2 percent year-on-year.
Respondents were optimistic about current job opportunities, but perceptions of employment security fell sharply.
Some employers are throwing open days to attract staff, while others are offering incentives and going the extra mile to keep the kaimahi they’ve already got.
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