Labour costs rise 1.3 percent

Labour costs rose 1.3 percent in the year to the June 2010 quarter, Statistics New Zealand said today. The salary and wage rates (including overtime) component of the labour cost index (LCI) rose 1.6 percent. Non-wage labour costs fell 0.5 percent, reflecting lower ACC levy rates, lower fringe benefit (FBT) tax rates, and one less paid statutory holiday.

Annual leave and statutory holiday costs fell 1.1 percent due to one less paid statutory holiday in 2010 than in 2009, which lowered the cost to employers. Annual leave and statutory holiday costs would otherwise have risen broadly in line with salary and wage rates.

Workplace accident insurance costs decreased by 5.0 percent in the year to the June 2010 quarter, reflecting lower ACC levy rates partly offset by increases in pay rates. 

Other non-wage labour costs (medical insurance, motor vehicles available for private use, and employer-related low interest loans) fell overall by 1.5 percent in the year to the June 2010 quarter. The cost of providing motor vehicles for private use fell, while the costs of providing medical insurance and employer-related low interest loans increased. The increase for medical insurance reflected higher premiums. The 1.5 percent fall in other non-wage labour costs reflects a fall in the top FBT rate on 1 April 2009. If the FBT rates used for the 2009 LCI had been used in 2010, other non-wage labour costs would have increased slightly, rather than fallen.

Superannuation costs increased 7.3 percent in the year to the June 2010 quarter, reflecting continued growth in employer-subsidised KiwiSaver membership. The increase this year in superannuation costs was smaller than the increase last year, when the minimum employer contribution for KiwiSaver rose from 1 percent (less tax credits) to 2 percent.

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