Crunching the numbers
How does the cost of living stack up against salary growth?
Nurses have voted to strike for better pay, and teachers are considering the same.
Adele Redmond compares their salaries with the cost of living.
After 20 years, Ashburton Intermediate School teacher Jade Tonks is earning what an accountant or lawyer might get five years into the job.
Compared with a lot of teachers, it’s a good wage. But it still wasn’t enough to afford Christmas presents, an oil change for her car, or to travel to Christchurch for her niece’s birthday.
‘‘My mum was saying ‘you can go up’, and I’m thinking I can’t because I’ve only got $20 in my bank account,’’ she said.
Once her mortgage, rates, utilities, insurance, phone and credit card bills are paid for, Tonks has enough left for a basic weekly menu: egg sandwiches for lunch, chicken, broccoli and potatoes for dinner.
‘‘I can’t go out on the weekend . . . people say ‘let’s go out for coffee’ and I start thinking, can I?
‘‘You’re not hoping to get rich [teaching] but you would hope you’re not having to worry about money every week. You want to think you can afford the basics in life, and this is me in Ashburton. What if you’re in Auckland or Wellington or even Christchurch?’’
Last week, about 27,000 nurses voted to strike for better working conditions and increased wages, aiming for pay parity with teachers. While the starting salary for nurses and primary school teachers is similar – $49,449 and $47,980 respectively – the top salaries in teachers’ pay scales are about
$10,000 higher than general nurses’, whose scale stops at
$66,775 a year.
But teachers too say the cost of living, particularly in Auckland, Wellington, Tauranga and Queenstown, is outstripping their income. At meetings held over the last fortnight, PostPrimary Teachers’ Association (PPTA) members largely endorsed the union’s claim for a 15 per cent pay increase to bring salaries back to 81 per cent above the median wage, president Jack Boyle said. New Zealand Educational Institute (NZEI), the primary and early childhood teachers’ union, is also likely to ask for a pay bump when it renegotiates its collective contract this month.
Salaries for experienced nurses and teachers surpass the average New Zealander’s annual income of $49,475. Nurses are paid extra for overtime and certain shifts, while teachers can earn more if they take on management ‘‘units’’ worth between $6000 and $15,000 per year and are required to work about seven fewer weeks annually – overtime excluded.
New Zealand Initiative chief economist Dr Eric Crampton said these professionals’ incomes were growing at roughly the same rate as the Consumer Price Index – about 1.7 per cent.
Nurses and teachers were likely ‘‘benchmarking’’ their salary against professionals with comparable levels of training and education but their employer – the New Zealand Government – could not easily respond to changes in the market without affecting other sectors.
‘‘Attracting people into those professions in Auckland is going to be more difficult because housing prices have exploded and that’s not an issue for other businesses,’’ Crampton said.
‘‘Any centrally-provided pay increase, that’s going to be the same across the whole country.’’
Statistics New Zealand’s Household Expenditure Survey, last conducted in 2016, showed an average weekly expenditure of $1300 per household (the average household size was 2.7 people).
Crampton said the only cost of living that has ‘‘really been ramping up’’ is housing. Even families earning more than
$100,000 a year say they have been feeling the pinch, with rents, mortgages, rates and utilities up 10.7 per cent on 2015.
Over the last 10 years, housing costs have increased by
62.9 per cent, according to the Reserve Bank of New Zealand. Last year, The Economist determined New Zealand had the most unaffordable housing in the world.
Trade Me figures showed median rents reached a ‘‘recording-breaking’’ $475 per week in April, the company’s head of property, Nigel Jeffries, said. An affordability index by interest.co.nz said homeowners on a median income could expect to pay between $362 and $461 per
‘‘You’re not hoping to get rich [teaching] but you would hope you’re not having to worry about money every week.’’
Jade Tonks, Ashburton teacher
week on their mortgage – up to 33 per cent of their weekly earnings.
However, housing costs varied wildly between regions: the median weekly house rental in Christchurch – $400 – is $150 less per week than in Auckland, where transport costs can also be a burden.
Danielle Wilkinson has been a registered nurse in Auckland for nearly 16 years. She’s at the top of the pay scale, receives a Working for Families credit to support her five children, and gets an extra professional allowance tied to her role.
‘‘I wouldn’t be able to make ends meet without it. Rent, power, water and internet alone, just those things, that’s my whole pay packet gone,’’ she said.
‘‘I can give the kids everything that they need but not even a small proportion of what I would like them to have – and it’s been a long time since I’ve had a holiday.’’
Public transport isn’t an option when shifts start at ‘‘stupid o’clock in the morning’’, so Wilkinson drives 40 minutes each way. That commute, added on to normal errands, costs her up to $100 a week in petrol.
The average household spent about $70 per week on private transport in 2016, according to Statistics New Zealand, and is likely to continue growing. Petrol prices have jumped 23 cents per litre since March to a record nominal cost of $2.29 per litre, and a 3-4 cent per litre Government fuel tax is due later this year, AA motoring expert Mark Stockdale said.
Food, too, is an area where households have to balance convenience with rising costs.
While the price of groceries has outgrown inflation by about 3 per cent over recent years, people are also spending more eating out. Half of New Zealand households reported eating out each week, and the cost of restaurant meals increased about 5 per cent between 2013 and 2016, according to Statistics New Zealand.
BNZ chief economist Tony Alexander said there was no simple answer as to how much disposable income a person needed to have a decent quality of life, and that figure would vary between regions.
‘‘Some people need a high income to feel good. Others just need food, clothing and shelter and peace from the city and they are very happy.’’
Despite diminishing returns on their pay and some difficult working conditions, teachers and nurses continue to care deeply about their jobs.
Wilkinson, who was ‘‘born to be a nurse’’, said the possibility of industrial action had ‘‘rekindled’’ her passion for the profession.
Likewise, Tonks still loved teaching. But when careers day rolled around each term she warned her class away.
‘‘I never encourage them to go into teaching. I always tell them to be a builder, or electrician, or plumber, where you can get the money.’’
Wages rising above inflation
For most people, wages have grown faster than the cost of living.
According to the Reserve Bank, the cost of goods and services has grown about 19 per cent since 2008, while wages have grown by 30 per cent.
OECD reports comparing salaries for Kiwi teachers and nurses with other countries show both professions are paid above the international average.
However, the global economic recession had dampened their wage growth in recent years.
One 2017 study showed no real growth in experienced teachers’ salaries between 2010 and 2014.
New Zealand teachers’ salaries were about 80 to 90 per cent of similarly-educated professionals in 2014, the study found. Their pay progression after 15 years’ experience ranged from 1 per cent to 9 per cent.
Nurses’ salaries grew steadily between 2005 and 2010 – roughly
38 per cent against 15 per cent inflation over the same period, according to a 2015 OECD report – and then petered out in the years to 2013.
But both professions’ unions say they are worth more than minimal increases to keep pace with inflation.
The New Zealand Nurses Organisation has rejected the offer of a 3 per cent pay rise and
$2000 lump sum, while the PostPrimary Teachers’ Association says it needs accommodation allowances in areas with expensive housing to address a national teacher shortage.