Costs rising faster than wages: CTU

Inflation is going up much faster than labour costs, according to a union group.

Total labour costs are up 2.4 per cent in the year to June, pushed up by extras such as much higher ACC insurance costs and superannuation, Statistics NZ figures showed.

Salary and wage rates including overtime were up 1.9 per cent in the June year according to figures first issued in August, but the total cost of labour rose faster than that because of add-on costs such as ACC.

Workplace accident insurance costs were up 27.5 per cent in the year to the June 2011 quarter. This rise resulted from increases in ACC levy rates and a 1.9 per cent increase in pay rates.

The Council of Trade Unions said the huge rise in ACC levies paid by employers had proved to be "quite unnecessary" because the increase was being reversed in the levy for next year.

The rise appeared to be a part of the Government's softening up process for the partial privatisation of ACC, the CTU said.

Earlier this month, ACC Minister Nick Smith said the ACC levy on the average fulltime worker would drop 17 per cent or $170 a year from April and the average business levy by 22 per cent or $1120.

Council of Trade Unions economist Bill Rosenberg said the 2.4 per cent rise in labour costs was "far below" the 5.3 per cent rise in overall costs. Even excluding the lift in GST, costs rose faster than wages, at 3.3 per cent.

"This shows that low wages are heading lower and we need to do something about it," Rosenberg said. Lifting the minimum wage was only one part of the answer. Workers also needed to get a fair share of productivity increases.

While total labour costs rose 2.4 per cent in the year to the June, non-wage labour costs rose 4.9 per cent, Statistics New Zealand said.

Employers' superannuation costs rose 11.3 per cent in the year to the June 2011 quarter.

The increase reflects continued growth in employer-subsidised KiwiSaver membership, as more join the scheme.

Increases in employer contribution rates for some defined benefit superannuation schemes also contributed.

Annual leave and statutory holiday costs increased 2.1 per cent in the year to the June 2011 quarter, as more people took leave in the past year. This appeared to be a catch-up after the costs of employees leave actually fell last year, Rosenberg said.