Wellington families face lean times

19:20, Oct 04 2012

Belt-tightening is beginning to cut deep as middle-income families in Wellington run out of ways to trim costs in the face of shrinking pay packets.

Statistics made public yesterday show incomes increased by the smallest amount in the June quarter since 1999, with budget advisers warning that people may soon run out of ways to cut back spending.

Nationally, the median weekly income from wages and salaries increased just $6 - or 0.7 per cent - to $806, and the hourly rate rose just 48 cents, or 2.4 per cent, to $20.86, the annual Statistics New Zealand survey revealed. In Wellington, pay fell from $863 to $850.

Berl chief economist Ganesh Nana said there were no surprises in the figures, which were a "clear reflection of the weakness of the New Zealand economy".

And the situation was unlikely to change, he warned. "I definitely wouldn't hang out or budget for a growth in income over the next two to three years . . . I hate to be depressing, but that's the reality."

Although some consumer prices might not increase during that time, global demand would continue to drive up the costs of items such as food and power.


Falling wages in Wellington were likely to be affected by public sector cuts, he said.

"You're looking at middle-income families having to restructure their budgets."

Federation of Family Budgeting Services chief executive Raewyn Fox said there were more middle-income earners seeking budgeting help, but many had already tightened their belts as far as they could go.

A spokeswoman for Finance Minister Bill English said there were positives in the figures, and she warned of reading much into the "small sample sizes" survey.

"Everyone is in a different situation and there is no doubt some people are finding things hard."

However, the income survey shows the median weekly income from all sources, not just wages and salaries, has increased 1.8 per cent, and median hourly earnings have increased 2.4 per cent, in the last year, compared with inflation of just 1 per cent.

"Despite some very tough economic conditions around the world, New Zealanders' incomes on the whole are continuing to rise faster than inflation," she said.

But Labour finance spokesman David Parker said the statistics showed that the minimum wage had to increase. "Our economy is stagnating."

Service and Food Workers Union national secretary John Ryall said he knew of families working up to three jobs to make ends meet, and 7 to 9-year-olds were looking after younger siblings at night while parents worked.

Other families were substituting potatoes for meat, and some workers could not afford the bus.

"The current minimum wage is not an income that workers can survive on, let alone have decent lives," Mr Ryall said.

Kim Campbell, chief executive of the Employers and Manufacturers Association, agreed wages were too low. The answer was raising productivity, he said.

"I would agree with the unions that, to get a decent living, people need more. But the fact is, on the other side of equation, look around you. Businesses are laying people off, they're struggling."

Councillor Jo Coughlan, Wellington City Council economic portfolio leader, said the council was working to attract new businesses and talent to the city.


Things are "very tight indeed", says employer Don Tilley, who has bucked a Wellington trend by managing a 1.5 per cent pay rise for staff this year.

He would have liked to give more in the line of last year's 3.5 per cent rise, but simply could not afford it.

"We have always looked after our staff very well. To keep a business going you need good staff."

A E Tilley, a sheet metal engineering firm started by Mr Tilley's father in 1921, survived the Great Depression; now it is battling falling exports and customers not going ahead with developments. "They are just staying put."

Earlier this year A E Tilley trialled a four-day week to keep costs down and keep staff employed, but a recent pickup meant everyone was back on a five-day week. Some were even getting a bit of overtime.

Mr Tilley hoped the end of the slowdown would soon be in sight and he would be able to give his 50 employees a better increase next year.


Tamara Baddeley's job means she may arrive at an elderly client's house to find them dead in a chair.

The Kilbirnie community service worker may find signs of abuse or remove maggots from a carpet, and will almost certainly have to shower and clothe the elderly. She earns $14.80 an hour and hasn't had a pay rise, or even a review, in five years.

After bills this fortnight, she will have $350 for groceries, petrol, pre-pay top-ups, and "anything that comes up", such as doctor bills.

She has a 19-year-old daughter, recovering from a hip operation, who wants to work until she starts a mechanics course, but can't find any paid work. "It's a matter of being able to budget," Ms Baddeley said.

It means home-brand groceries, only seasonal fresh fruit and vegetables, and meat up to three times a week "if the mince is on special or the chops are on special".

There were often two to three days a fortnight when there was no money in her account.

The Dominion Post