Re­mu­ner­a­tion up­date: move­ments largely un­changed but there are un­der­ly­ing pres­sures

Strate­gic Pay pub­lishes more than 30 re­mu­ner­a­tion re­ports each year, based on data sourced from more than 1100 or­gan­i­sa­tions across New Zealand. John McGill looks at the lat­est find­ings in the first 2016 New Zealand Re­mu­ner­a­tion Re­port and whether there a

NZ Business - - INSIGHT -

WE pro­duce our ma­jor New Zealand Re­mu­ner­a­tion sur­vey re­port at this time of year and review the re­sults with our clients in a se­ries of 11 brief­ings across the coun­try. The sur­vey it­self, and the job eval­u­a­tion method­ol­ogy be­hind it, was in­tro­duced into New Zealand in the early 1980s (by what was then Price Water­house) and has a long his­tory in the mar­ket­place.

Dis­till­ing the data of 500 or­gan­i­sa­tions and more than 140,000 in­di­vid­ual roles into a few sin­gle per­cent­ages is not an easy task but the num­bers are in­ter­est­ing and show clearly that, de­spite vir­tu­ally no con­sumer price in­fla­tion, over­all salary move­ments are pos­i­tive and re­main in the one per­cent to three per­cent range for in­creases over the past year.

DIF­FER­ENCES BY SEC­TOR

There are some sec­tor dif­fer­ences with the re­sults for the pri­vate sec­tor closer to three per­cent and those of the pub­lic sec­tor nearer two per­cent. Within in­di­vid­ual sec­tors we see also a range of dif­fer­ences, for ex­am­ple some parts of the en­gi­neer­ing and con­struc­tion sec­tor have recorded higher move­ments and vari­a­tions around the fore­casts for the next year.

Fore­casts are al­ways in­ter­est­ing and sub­ject, of course, to change should cir­cum­stances vary. How­ever, our re­sults for the next year, from pre­dic­tions made in the first two months of this year, are clear. More of the same ba­si­cally, i.e. sim­i­lar move­ments are pre­dicted in the next 12 months to what has oc­curred in the past year.

WHAT COULD CHANGE

Are there any in­di­ca­tions that this pic­ture is likely to change soon? The very low lev­els of in­fla­tion and in­ter­est rates, steady lev­els of un­em­ploy­ment, and con­tin­ued growth in the econ­omy paint a sta­ble en­vi­ron­ment for those in work.

Their in­comes are grow­ing in real terms – and have done for the past two years – and the en­vi­ron­ment ap­pears steady at present. In­ter­est­ingly, there are early in­di­ca­tions from ex­pec­ta­tion sur­veys, such as the BNZ Busi­ness Con­fi­dence Sur­vey, that sug­gest short­ages of skilled staff may be in­creas­ing which could put pres­sures on pro­fes­sional, tech­ni­cal and man­age­rial roles.

DIF­FER­ENCES BY RE­GION: A TALE OF TWO CITIES?

We looked care­fully at our March data for any signs of pay dif­fer­en­tials be­tween Auck­land and the rest of the coun­try. As yet there is lit­tle sign. Gen­er­ally, or­gan­i­sa­tions in Auck­land have been re­luc­tant to pay spe­cific al­lowances to em­ploy­ees, but we are aware that many or­gan­i­sa­tions op­er­ate in­for­mal poli­cies within their pay struc­tures. The higher cost of hous­ing/ trans­port is al­lowed for by tend­ing to pay higher in band or grade in Auck­land than else­where rather than hav­ing a spe­cific, for­malised pol­icy in place.

Are we likely to see the de­vel­op­ment of spe­cific al­lowances in Auck­land? It is likely in my view if house prices con­tinue to out­strip those of the rest of the coun­try. A well-doc­u­mented ex­am­ple of hav­ing such an al­lowance is in Lon­don where a “weight­ing” for jobs in the broader city has ex­isted since the 1920s for many, but not all, em­ploy­ees. 2014 data shows av­er­age house prices in Lon­don are 2.4 times the rate of the rest of Bri­tain and this sort of pres­sure will en­sure the al­lowance is main­tained. The Lon­don al­lowance has devel­oped a life of its own though and spread over time. It ex­tends these days, at a lower level ad­mit­tedly, to Brighton – 80 kilo­me­tres south.

In sum­mary, we have seen small move­ments in the last 12 months and much the same for the year ahead. There seems to be a hint of short­ages in skilled roles and much dis­cus­sion around an Auck­land pre­mium, which we rec­om­mend keep­ing a close eye on. John McGill is the chief ex­ec­u­tive of­fi­cer at Strate­gic Pay.

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