Wages and salaries during 2009 recorded the lowest growth in eight years - just 1.8% - continuing a 15-month decline since wage growth peaked at 4% in the quarter to September 2008.
ASB chief economist Nick Tuffley said the labour cost index, released by Statistics New Zealand yesterday, revealed an ongoing slowing in the rate of wage increases with both the rate of quarterly change and annual change down significantly from the high rates recorded before the recession when the labour market had become very tight.
"The slowdown in wage growth was observed in both the private and public measures of labour costs," Mr Tuffley said in a statement yesterday.
Government Statistician Geoff Bascand, of Statistics New Zealand, said the labour cost index released yesterday showed salary and wage rates, including overtime, for the public and private sectors increased in the year to the December 2009 quarter, respectively, by 2.4% and 1.6%
"The increase for the public sector is the lowest since an identical increase in the year to the September 2004 quarter, while the private sector increase is the lowest since a 1.6% rise in the year to the March 2001 quarter," he said in a statement yesterday.
BNZ chief economist Craig Ebert said yesterday's labour market reports "were even softer than we expected".
"It wasn't just that wage inflation continued to slow to a relatively mild pace. Signs of further employment softness suggested income growth would remain under downward pressure for a good while to come.
"It's the unavoidable hangover of a recession, even as the forward activity indicators begin to improve," he said in a statement.
Mr Tuffley said through the recession, there had been widespread signs of the adjustment to the labour market through lower wage growth and hours worked, with the reduction in employment being relatively muted.
The quarterly employment survey results, also released yesterday, showed for the year to the December 2009 quarter, employment, as measured by the number of full-time equivalent employees, decreased 2.5% and filled jobs decreased by 1.7%.
"The manufacturing and construction industries were the main contributors to both these annual decreases," Mr Bascand said.
Mr Tuffley said the employment survey results reflected "the continued weak state of the labour market", although there were signs employment was nearing its trough with a slowing in the decline in hours paid.
The increase in filled jobs and full-time equivalents also pointed to a stabilisation in conditions, with the seasonally adjusted full-time equivalents gain suggesting a flat outcome for employment growth when the household labour force survey report is released tomorrow.
Mr Tuffley said the survey would give a more forward-looking idea of "how much slack remains in the labour market" and how long wage growth would remain muted.
