Wage gap with Australia set to widen

Last updated 08:10 01/03/2010

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A new survey indicates the wage gap between this country and Australia appears set to widen, with accounting firm Grant Thornton warning the figures could indicate the start of another brain drain from New Zealand.

Its survey of 250 Australian and 180 New Zealand businesses found 78 percent of Australian businesses were looking to increase wages either in line with inflation or higher, compared with 55 percent of companies in this country.

Peter Sherwin, a partner of Grant Thornton New Zealand, said the figures could indicate the beginning of another brain drain period, which would hamper this country's recovery from recession.

"We are already in danger of losing many of our top talent to Australia, and this will only increase as the wage gap between the two countries gets wider," Mr Sherwin said.

Reducing the top personal income tax rate would help create the right environment for businesses in New Zealand to perform and to retain talent.

With Australia's unemployment rate of 5.3 percent, compared to this country's decade-high 7.3 percent, companies across the Tasman were having to lift wages to attract the best talent and New Zealand was an obvious target, Mr Sherwin said.

In Australia 23 percent of companies intend increasing wages more than inflation, 55 percent in line with inflation and 19 percent expect no increase.

In this country 12 percent expect to increase wages more than inflation, 43 percent in line with inflation and 41 percent to hold wages at present levels. The global average is 11 percent, 40 percent and 33 percent.

"Just in the last few weeks we have seen two sharply contrasting pictures. On one hand we have over 2000 people trying to get jobs at an Auckland supermarket, while on the other there is a growing shortage of medical graduates as they head to Australia and beyond where remuneration packages are 30 percent-plus higher than in New Zealand," Mr Sherwin said.

"The last thing New Zealand wants now is to have our recovery stalled by a shortage of talent."

Another indication of the robustness of the Australian economy compared with New Zealand, was that in the past year 36 percent of companies across the Tasman increased staff, 27 percent decreased and 17 percent stayed the same.

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- NZPA

63 comments
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woodsey007   #63   09:42 pm Mar 10 2010

New Zealand employers need a mind shift. I remember a very successful businessman in the UK being interviewed by a reporter about his wealth and his business model. He said "look, I don't pay good wages because I'm rich, - I'm rich because I pay good wages"

In other words, he paid good money to get top talent which made his business a winner (not a banker).

SM   #62   06:22 pm Mar 08 2010

2010 sees new contracts being negotiated for NZ's primary and secondary teachers. Surely this is the perfect opportunity for the National Government to show their commitment and begin closing the wage gap with Australia...

Have I just created a new advertisement for Tui?

sarah   #61   03:18 pm Mar 02 2010

why does everyone think house ownership is impossible in new zealand? of course your not going to get a mansion for your first home, but i managed to buy a house a year ago - on the minimum wage!

Pete   #60   02:55 pm Mar 02 2010

Your occupation determines your financial ranking in society. A school caretaker in Australia has the same ranking in Australian society as a school caretaker does in NZ society. The boat might sit higher in the water, but you are still on the same deck.

Richard   #59   02:54 pm Mar 02 2010

#56 never met a poor Australian? Might want to visit an aboriginal community...Redfern for instance

Jonny   #58   01:06 pm Mar 02 2010

"First do more than you are paid for, Before expecting to get paid for more than you do."

Maybe we need to work a little harder. Instead of building a cycle way throughout NZ, how about an underground railway in the major cities-Auckland for one needs something. Get all the dole bludgers in that area, give them a shovel and start digging the tunnels by hand.

Honestly, we need to start thinking BIG. We need to stop wondering what the new technologies that are out do to an economy then employ them here 10 years later because we didn't "know what the effects might be."

Brain Drain. Do what the U.K does-any medical degree(nurses, doctors, anything to do with health) have to do a MINIMUM 2 years working in their home country before they can leave to work overseas. Why should we teach people only to have them leave when they finish? In fact, do that with all the graduates that this country needs.

When I finish Uni, I'm not staying-already traveled the world, and there is more fun out there compared to this "laid back, beautiful country" that does nothing. The cities overseas are "busy, expensive, overcrowded etc etc" but they always forget to add the words "fun, cool, exciting." Been to London? That's an awesome place. New York too.

Mel   #57   10:21 am Mar 02 2010

I agree with merstham #54 We do have a beautiful country, but it's no use if if can't be enjoyed because you have to work 10 hour days on such low pay just to pay over-inflated power/food/rent bills etc. Get real. Aussies can work less hours and have heaps more money left over to travel to NZ and enjoy our country, then go home and rake in more money. We are missing out :(

SherylAnn   #56   10:08 am Mar 02 2010

Wake up Kiwis, we will always be behind Australia in terms of income gap, this government in reality does not care about it. We need to have mandatory pay increases each year at least the CPI to even start making a move towards cutting the gap. How on earth can we ever catch up if for years Australians have had great wage rises, here in NZ even in the recent boom times our wage rises if we got them were inadequate. Those who say it is expensive to live in Australia, where on earth do you live and what are you spending your higher income on, I visit family two/three times a year over there and have found house prices comparible, power/petrol so much cheaper, food on a comparable rate but with a much larger disposable income I have not met any poverty struck Aussies yet, not like here. I am tired of people saying we have to be more productive, most people I know work damn hard and for long hours and if they are lucky they may get a wage that lets them stay afloat. Until we sort out our burgeoning welfare bill and stop promoting welfare as a lifestyle and paying people to have umpteen children we will never get ahead. The difference between Australia and New Zealand is Australia never signed a Treaty with the Aboriginies this also holds New Zealand back, that and our worship of rugby and booze.

Richard   #55   09:42 am Mar 02 2010

I disagree merstham #37 lifestyle is about being able to go hiking, to the beach etc and with so many people living near the coast, beautiful scenery etc I think it is a great lifestyle we have. Also our scenery is deserted compared to other countries. I have travelled quite a bit in Europe and there are literally people everywhere. Beaches are packed and anything even remotely touristy has thousands of people. How can you enjoy something with so many people around? It is so easy to get away from the masses and enjoy nature in NZ. Problem is people in here take it for granted. I think even the POMS don't winge as much about their country as us yet there are so many people who would love to live in a country like ours. Go figure.

merstham   #54   02:24 am Mar 02 2010

I think it's funny when people justify the wage gap by saying 'It's a life style choice'. Given that the biggest influence on one's lifestyle is probably salary. Given that most N.Z business' don't actually supply 'the lifestyle'. Given that they actually don't want people exercising their 'lifestyle' but rather to work long hours for low pay. Given that the 'urban lifestyle' to which most skilled workers/ professionals subscribe , is pretty much the same throughout the western world.

NZ IS probably one of the better places to live, but it would seem 'lifestyle' is'nt enough of a compensation ( if it exists at all).


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