Why April could be good for your pocket

Expecting a pay rise? This could be your month. Photo / iStock

There could be good news if you are hanging out for a pay rise - April is the most common month New Zealand businesses change pay for their staff.

Research carried out by Statistics New Zealand on behalf of the Reserve Bank found 65 per cent of companies questioned had a set month to change wages or salaries of staff.

Of those businesses 16 per cent made the change in April and a further 15 per cent altered pay in July.

October and January were also popular times of the year to make changes but much less so than April and July with around 7 per cent of companies doing so.

Analysis of the data by the Reserve Bank's Jed Armstrong and Miles Parker found the most likely reason why April was the most common month was due to New Zealand having a March 31 fiscal year.

"April is often when new budgets are implemented, and wage adjustments would follow naturally from this process.

"The July changes are related to the 'half-year pay reviews' which are common in many firms. July seems like a natural time to carry out wage adjustments in New Zealand; it is during the quieter winter months, staff are less likely to be away on holidays.

"Moreover, July reflects the start of the Australian fiscal year, so firms with an Australian
connection (e.g. operations in Australia, and Australian parent company) may be more likely to change wages in July than in other months."

But not all firms made annual changes with 20 per cent making less than annual changes - smaller companies were more likely to wait longer to change pay.

The lucky ones may be the employees who work for the 6 per cent of businesses which change pay more often than once a year.

The bad news is that payrises may be small or non-existent this year because of low inflation levels.

April is often when new budgets are implemented, and wage adjustments would follow naturally from this process.

The research found 43 per cent of companies used past or future inflation expectations to help make wage and salary decisions and larger firms were more likely to do so more than half of employees (55 per cent) facing pay decisions impacted by inflation.

Changes to the minimum wage had less of an impact with just 13 per cent of firms moving the wages because of a requirement to pay staff a certain amount above the minimum wage.

However the research also noted New Zealand businesses were reluctant to cut pay because of concerns about losing value staff members.

The discussion paper was based on research carried out in 2010 by Statistics New Zealand covering more than 5300 businesses.