Wages in New Zealand are barely keeping up with inflation and are no further ahead compared with inflation than they were six months ago, Council of Trade Unions economist Bill Rosenberg says.
Commenting on Statistics New Zealand's labour cost index (LCI) for the June quarter, Mr Rosenberg said New Zealand wages were 2.5% behind where they were in March 2009, but in Australia, comparable data showed wages were 2.5% ahead of where they were in March 2009.
"This means a further widening of the wage gap between New Zealand and Australia," he said.
"Inflation is low and wages certainly aren't pushing up prices. But the economy is going nowhere with unemployment remaining high and at current settings likely to remain there for a long time."
More spending power in working people's pockets might be what was needed to stimulate activity in the economy. If people were buying more New Zealand-made goods and services, firms would be able to employ more people, Mr Rosenberg said.
The LCI, Statistics NZ's preferred measure of wages, was in line with expectations, growing 0.5% in the June quarter and 2.1% for the year.
BNZ economist Doug Steel said there was nothing to immediately alarm the Reserve Bank although there was plenty to monitor. His take on the figures was different from that provided by Mr Rosenberg and the CTU.
Although the annual figure was above the Reserve Bank's target of 2% by the slimmest margin, it followed what had been relatively soft employment growth during the past year, Mr Steel said.
"If the economy and labour market evolve as we expect over the coming 12 months to 24 months, we think annual LCI inflation will push above Reserve Bank expectations."
The BNZ was forecasting the LCI to accelerate over that period to approach a 3% annual increase.
Statistics NZ figures showed private sector average hourly earnings rose 0.2% in the quarter to be up 2.9% for the year.
The more reliable nominal wage measure, the unadjusted LCI, increased 0.8% in the quarter to be running at an annual pace of 3.6%.
Mr Steel said that inferred "decent growth" in real wages as inflation in the same period was 1%.
"This helps explain the reasonable degree of household spending growth over the past year."
The somewhat soft-looking average hourly earnings were more than compensated for by a 2.1% rise in paid hours in the quarter, the strongest quarterly growth in 12 years.
Total weekly gross earnings were up 5.2% on a year ago.
