Union chief renews call for 5pc pay rise

The Council of Trade Unions has called for the union movement to renew and intensify its campaign for a 5 per cent wage rise - just as inflation breaks the Reserve Bank's 1 to 3 per cent target.

The call came from council president Ross Wilson to the biennial conference in Wellington yesterday, three days after Reserve Bank Governor Alan Bollard warned of imbalances in the economy and on the day new figures tipped the annual inflation rate to 3.4 per cent.

Seemingly in anticipation of criticism that wage rises will contribute to inflation, Mr Wilson said the unions would give "no credibility at all" to sudden post-election scaremongering by some bank economists about a wage-price spiral.

Consumer price inflation in the September quarter rose 1.1 per cent in figures released yesterday, pushing the annual inflation rate to 3.4 per cent.

Dr Bollard said on Friday that the bank's task of maintaining inflation within 1 to 3 per cent was particularly challenging thanks to strong household spending, oil price rises and the prospect of more Government spending.

Mr Wilson said the same economists who now warned about the labour market putting pressure on inflation were happy during the election campaign to ignore the inflationary impact of the "massive" tax cuts National had promised.

He said wage rises were not inflationary if part of the pay increase came from profits and if productivity was improving.

The main pressure on inflation at present came from oil prices and housing.

Mr Wilson said the economic evidence to support the 5 per cent "Fair Share - Five in 05" pay rise campaign was overwhelming. It included:

* Corporate profits rising 11 per cent a year from 2000 to 2004.

* Wages rising just under 2.1 per cent annually over the same period.

* Directors fees rising 20.5 per cent in the last year.

* New Zealand's average wage being 30 per cent lower than in Australia, and the minimum wage being 46 per cent less this side of the Tasman.

Mr Wilson said the challenge for the union movement was to close the gap.

The evidence after six months of the 5 per cent wage rise campaign had shown the only way it would be achieved was by collective bargaining.

Public support had been strong for strike action when it occurred in pursuit of fair wage increases, he said.

Meanwhile, the Engineering, Printing and Manufacturing Union, which has led the 5 per cent pay rise campaign, said the latest inflation figures showed wage pressures were having little impact on inflation.

The national secretary of the union, Andrew Little, said the higher inflation had more to do with skyrocketing petrol prices than wage settlements.

Mr Little said the union would consider the latest consumer price index figures when formulating wage claims.