The quarterly lift was largely due to a higher minimum wage after the government raised it on April 1 by 75 cents to $16.50 an hour. The pay equity increase for care and support workers remains the key contributor to the annual increase in private sector wage inflation, Stats NZ said.
Public sector wage inflation was up 0.3 per cent in the quarter for a 1.4 per cent annual gain, and across both sectors, wage inflation rose a quarterly 0.5 per cent and an annual 1.9 per cent.
If the impact of the higher minimum wage and the care workers pay equity increase are stripped out, wage inflation across both sectors would have risen a quarterly 0.4 per cent and an annual 1.5 per cent, Stats NZ.
A record flow of migrants over the past several years has given employers a large pool of labour to choose from, which has helped keep a lid on wage inflation.
While ongoing pay negotiations across different sectors have contributed to weaker public sector wage growth in the year to June 2018, pay pressure is growing with different sectors walking off the job or threatening to do so.
Nurses are currently voting on whether or not to accept the fourth offer from district health boards and could opt to resume strike action after walking off the job last month.
The NZEI teachers union, which includes primary teachers and principals, is seeking an immediate 16 percent pay rise and improved working conditions. They will walk off the job for a full day in mid-August.
Today, nearly 3,000 PSA union members at Inland Revenue will hold a four-hour strike because their employer is refusing to come back to the table to discuss pay and pay systems, PSA says.
For now, however, the tepid wage inflation will likely add to the view the central bank will continue to signal a flat interest rate track at next week's review, in particular as it will consider any lift from the minimum wage or pay equity settlement to be one-offs and will likely look through them.
It now has the additional goal "supporting maximum levels of sustainable employment within the economy" to the existing goal of price stability.
The participation rate was 70.9 per cent from 70.8 per cent in the March quarter.
The underutilisation rate, which measures the country's potential labour supply and unmet need for work, lifted 0.1 percentage points from the prior quarter to 12 per cent.
Total actual hours worked rose 1.4 per cent in the quarter to 90 million.
The quarterly employment survey, also released today, showed private sector ordinary time average hourly earnings rose 0.2 per cent to $28.97 in the June quarter and were 3.3 per cent higher than a year earlier. Public sector ordinary time wages fell 0.5 per cent to $39.04 in the June quarter and lifted 1.5 per cent on the year.
Stats NZ also said the seasonally adjusted employment rate for women rose to a record 62.8 per cent in the June quarter versus 62.6 per cent last quarter.
"The employment rate for women is the highest since records began over 30 years ago, and represents 1.25 million women at work," Stats NZ said. On an annual basis, there were 50,000 more women employed, the majority in the healthcare and social assistance industry.
"Employment growth in healthcare and social assistance is possibly in response to New Zealand's ageing population, as the largest rise came from aged care residential and other health services," said labour market manager Sean Broughton.
The overall employment rate was 67.7 per cent, unchanged on the quarter earlier.
