Workers say pay falling behind, expert says they can vote with their feet

"This is going to drive staff turnover when organisations can least afford it," AUT Professor of Human Resource Management Jarrod Haar says. Photo / Supplied

As inflation spikes amid the pandemic, 70 per cent of Kiwi workers say their wages have not kept up with the rising cost of living over the past 12 months.

That's according to the Council of Trade Unions "Mood of the Workforce" survey of 1600 workers.

"In a year when our frontline workers got us through the pandemic, Kiwis are clearly not being paid what they deserve," says acting CTU secretary Tali Williams.

"Compounding the stress on working families has been increased workloads. Fifty-nine per cent of New Zealand workers report their workload is worse than it was 12 months ago, with 50 per cent reporting their work-life balance worsening over that same period.

"Working people have been at the front lines of the Covid pandemic – keeping us safe, keeping us fed and keeping our country moving. But the results of this survey says we are working harder for less reward, squeezed from low wages and high levels of stress and burnout," Williams says

For Williams, the survey, taken January 2-4, reveals a need for employment law change.

"This year as we continue to grapple with the pandemic, the Government needs to take steps to rebalance our economy and make sure that working people are paid fairly," the CTU head says.

"This shows the impact of New Zealand's low-wage economy and the importance of policies like Fair Pay Agreements, which would set minimum floors across industries for workers pay and conditions. New Zealand is one of just a few developed countries that does not have some form of these minimum conditions, and we see that reflected in persistent low wages."

But AUT Professor of Human Resource Management Jarrod Haar notes that while many workers might feel squeezed, they've never had as much bargaining power.

The context of the survey is an ultra-tight labour market where staff can and do vote with their feet - helping to fuel the phenomenon he's been tracking called "The Great Resignation".

Haar says although the timing couldn't be worse for many firms, already squeezed by Covid restrictions - but that they should consider pay rises to limit employee turnover. A rise can often be a cheaper option than recruiting and training a new staffer, who could well cost more in today's market.

Haar notes that while the CTU's survey did not actually ask any questions around stress or burnout, it did reveal rising workload, work-life balance concerns and paypacket concerns that will drive stress and "thoughts of quitting".

"Given the tight labour market, we will see employers come under immense pressure to raise the pay of workers," Haar says.

"While this might be a perennial issue, the market conditions do mean employees can 'vote with their feet'. Given turnover costs can be around 100 per cent of salary for a skilled worker, it may be much cheaper to give pay rises than lose staff – especially talented staff, who will be much higher than 100 per cent of their salary."

The cost of living rose at the fastest pace in a generation during 2021.

Annual inflation was 4.9 per cent in the third quarter of last year, according to Statistics New Zealand.

Experts expect the figure for the final quarter to match or exceed that rate for the final quarter, while Kiwibank is expecting inflation to rise to 6 per cent this year.

Herald columnist Diana Clement says inflation doesn't just push up the price of essentials such as food and petrol. It also affects mortgage repayments thanks to the Reserve Bank putting up interest rates to counter inflation.