Shyness keeps wage rates down

Shyness could be the major obstacle standing between you and a pay rise, said the BNZ's top economist.

Tony Alexander said that in present labour market conditions, with unemployment at its lowest for a decade, it could be traditional Kiwi reserve that prevented employees from bulking up their pay packets.

"It is disappointing that the free market is not working well enough in the labour market. There should be higher wages on a general basis," he said.

"I have been wondering for a while when employers are going to start upping their offers and I think that, as employees, we have an unwillingness to be bolshie in asking for a rise.

"I have been waiting for wage rates to rise for the past four years."

With unemployment so low, it was a wonder that a shortage of available workers had not pushed up the pay rates. The Department of Statistics labour cost index showed that salaries and wages rose by 2.4 per cent on average in the 12 months to December, while the number of people in work rose by 3 per cent.

Unemployment dropped from 11 per cent a decade ago to 4.6 per cent.

"Businesses have had it easy," Alexander said. "In the past, they could grow their output by hiring more people, but now they have to grow productivity, which is the only way to raise the standard of living and bring us back up in the OECD tables."

However, Anna Wai, of the central branch of the Employers and Manufacturers' Association, said many employees were all too aware of rising business costs and that had kept wage demands down.

"I think it would be difficult for employees to expect more with the increased costs coming in for employers."

- NZPA