Wages are starting to rise in New Zealand with the help of the increase in the minimum wage and the Care and Support Workers (Pay Equity) Settlement.
Statistics New Zealand's labour market data, released yesterday, showed the labour cost index (LCI) increased 1.9% in the year to June.
Average ordinary-time hourly earnings in the Quarterly Employment Survey, the other measure of wage growth, rose to $31, an annual increase of 3%.
Statistics NZ said the 3% increase reflected a 1.5% increase in the public sector and a 3.3% increase in the private sector.
Council of Trade Unions secretary Sam Huggard welcomed the news wages were being lifted out of ''long-term stagnation''.
Economic settings were deliberately designed by the last government to benefit international investors and shareholders through low wages for Kiwis.
''This Government is actively delivering a fairer deal to working New Zealanders.''
The rise in the minimum wage and the pay equity settlement represented help delivered to the most undervalued workers and their families, he said.
ASB senior economist Mark Smith said the wage data continued to confirm a contained inflation backdrop.
The LCI report confirmed 37% of salary and wage earners had achieved a wage increase above 2% in the last 12 months. However, nearly half had reported no annual increase.
Median and mean increases from the LCI went up but remained moderate at 2.5% and 3.3% respectively.
The backdrop for core inflation and labour costs remained consistent with the middle of the 1% to 3% policy target inflation agreement, he said.
''This provides the Reserve Bank with valuable breathing space to assess the employment and inflation outlook. The most likely outlook is for the official cash rate to move up from late November but this is conditional on the economy retaining sufficient momentum to push inflation higher.''
Kiwibank senior economist Jeremy Couchman said stripping away the minimum wage rise and the pay equity settlement meant underlying wage growth remained subdued.
''Strengthening wage growth will come with time. The Government is looking to lift the minimum wage to $20 an hour by April 2021, which implies some hefty hikes.''
The labour market remained tight and was expected to tighten further, he said.
Risks remained, as indicated in Tuesday's July ANZ Business Outlook survey.
Economic activity might cool, snuffing out the clearly building momentum in inflation.
Kiwibank maintained its view the Reserve Bank had to keep the OCR unchanged at 1.75% until August next year.
