Annual leave drives non-wage labour costs

Labour costs rose 3.9 percent in the year to the June 2007 quarter, Statistics New Zealand said today. Thisis the largest annual increase since the series began in the December 1992 quarter.

The salary and wagerates (including overtime) component of the Labour Cost Index (LCI) rose 3.2 percent from the June 2006 tothe June 2007 quarter, while the non-wage labour costs component rose 8.1 percent.

The increase in the non-wage labour costs component of the LCI was partly driven by a 9.3 percentincrease in annual leave and statutory holidays, the largest annual increase since the series began in theDecember 1992 quarter.

The increase in minimum annual leave entitlements from three weeks per yearto four weeks per year on 1 April 2007 was the main reason for the increase.

Employers’ workplace accident insurance costs rose 9.3 percent in the year to the June 2007 quarter,following a 4.8 percent increase in the year to the June 2006 quarter.

The latest annual increase reflectsincreases in both pay rates and Accident Compensation Corporation (ACC) levy rates.

In the year to the June 2007 quarter, employer superannuation costs rose 4.2 percent.

For the privatesector, employer superannuation costs increased 5.2 percent in the year to the June 2007 quarter, thelargest annual increase since the series began in the December 1992 quarter.

For the public sector theincrease was 3.2 percent.

The index for other non-wage labour costs (motor vehicles available for private use, medical insurance, andemployer-related low interest loans) rose 1.8 percent in the year to the June 2007 quarter.

The cost ofproviding motor vehicles for private use and medical insurance both increased, while employer-related lowinterest loans decreased.