Salaries still rising during downturn

Salaries are still rising, especially in Wellington, in a survey by Mercer but the next year could be a different story.

Salaries in New Zealand have so far had a soft landing, but the lag effect of the global financial crisis combined with rising unemployment and a decreasing demand for labour indicates a slowdown in salaries growth is inevitable in 2010, Mercer said.

National salaries for those who remained in the same job in the 12 months to July rose 5.2 per cent, down slightly from a rise of 5.4 per cent the year prior.

Public sector salaries rose by 5.3 per cent, compared to 3.8 per cent in the private sector.

Wellington experienced the highest rate of salary growth, with same incumbent pay rising by 5.2 per cent in the 12 months to July 2009, compared with 5.9 per cent in 2008.

Auckland employees have seen less generous pay increases, rising by 3.8 per cent from 4.8 per cent in 2008.

Executives received an increase of 5 per cent this year, down from the 5.9 per cent last year and professionals saw the lowest pay movements at 3.4 per cent, down from a 5.8 per cent pay rise in 2008.

David Little, a senior associate at Mercer, said salaries typically lagged behind economic and labour market conditions because of the timetable for budgets.

"Competition for jobs is going to become fierce with limited new jobs being created, involuntary turnover increasing and unemployment on the rise," Mr Little said.

- NZPA