Salary and pay expectations moving down fast

A major downward readjustment in pay rises is taking place as workers and businesses cut their cloth to the sudden change in the economic environment, says David Lowe, Employment Services Manager for the Northern Employers and Manufacturers Association.

“Yesterday’s Labour Cost Index was historical and so are today’s unemployment figures,” he said.

“They don’t reflect the fast pace of change taking place.

“Business is far more aware of the acceleration in unemployment and the drop in retail and manufacturing sales.

“Today’s report on the rise in unemployment to five per cent for the March quarter does not include the large number of people laid off last month.

“Most staff are being told there will be no wage increases this year, or decisions on wages increases are being deferred.

“The turnaround from last year when wage increase expectations were 4 to 5 per cent is huge.

“Private sector employers have known for years wage rates in the public sector were out of control; the Labour Cost Index revealed the extent that taxpayers have been funding a 1.2 per cent wage premium for public servants.

“Inflation is also plummeting. Its currently running at an annualized rate just over one per cent, and falling.

“The sooner everyone comes to terms with the fact there will be no wage increases this year the faster we will find a base on which to build a recovery.

“Most workers and employers are collaborating to achieve precisely that outcome.

“But some union advocates from the good old days are trying to drive up wage expectations with claims that inflation is sure to rise over four per cent again soon despite the world outlook and the best advice from our Reserve Bank.”