Job cuts seemed to be the last resort being taken by New Zealand firms.
The Statistics New Zealand's labour cost index and quarterly employment survey, both released yesterday, told a sombre story.
The weakness in wages was prominent in construction, wholesale trade and manufacturing, with the reduction in pay rates tied to the economic downturn and a significant fall in activity recorded in those industries.
Weakness in wage figures reinforced that the Reserve Bank could be comfortable leaving the official cash rate at a low level through the next 12 months.
The data showed that employment measures, were also weak with growth in total paid hours falling to 1.2%.
ASB chief economist Nick Tuffley said that pointed to another sizeable decline in the number of people employed.
He expected tomorrow's household labour force survey to confirm unemployment increased to 5.5% in the three months ended June.
Wage freezes had become evident quickly in the data, with the labour cost index registering an increase of 0.3% in the three months ended June.
That was the smallest increase since June 1999.
Annual wage inflation was now moderating, registering a 2.9% increase on year-ago levels compared to 3.4% in March.
Survey respondents noted falls in pay rates were as a result of the economic downturn.
A breakdown of wage increases by size also confirmed the impact of wage freezes, evident by the large jump in the percentage of those receiving no change in the quarter - increasing to 44% from 40%.
The share receiving an increase of more than 3% fell to 45% from 51%.
Mr Tuffley said the jobs-related figures in the employment survey suggested weak employment and less work being done in total.
"The message the survey has given for several quarters is a considerable reduction in both jobs and hours worked."
BNZ Capital senior economist Craig Ebert said there were clear signs in the labour market reports that household income was being squeezed from all sides.
"Not only is wage and salary growth fading fast, but firms are still aggressively managing labour costs by way of further reductions in staff numbers and hours. Of course, it's not good news for consumers. But the cost cutting would help explain the sense of recovery now being expressed by businesses."
Westpac chief economist Brendan O'Donovan drilled down further into the numbers to provide some sobering statistics.
A small proportion of workers usually received their wage increases in the June quarter, but only 10% of workers received an increase in June this year - the lowest proportion since mid-1995.
The scene was set for even weaker wage growth because the bulk of employees received their pay increases later in the year, usually in September.
His forecasts showed growth in annual private sector all salary and wage rates slowing from 2.7% currently, to 1.8% by March 2010.
There was very little immediate market reaction to the data, either in interest rates or the currency which reacted to other influences out of the United States.
While the results were weaker than expected, they reinforced what the market already knew - the labour market and general economic activity were weak in the second quarter of the year.
