Labour costs rise 2.6 percent

Labour costs rose 2.6 percent in the year to the June 2012 quarter, with the non-wage component rising 5.9 percent, Statistics New Zealand said today. The increase in the non-wage labour costs component of the labour cost index (LCI) reflected higher annual leave and statutory holiday costs and higher superannuation costs.

The salary and wage rates (including overtime) component, released in August 2012, increased 2.0 percent in the year to the June 2012 quarter.

Annual leave and statutory holiday costs increased 8.4 percent in the year to the June 2012 quarter. In 2011 there were nine statutory holidays; in 2012 there were 11. This change increased employers' holiday costs, as did a 2.0 percent increase in pay rates.

Employers' superannuation costs per employee rose 4.1 percent in the year to the June 2012 quarter. This increase reflects continued growth in employer-subsidised KiwiSaver membership and higher pay rates, partly offset by falls in membership in other employer-subsidised superannuation schemes.

Workplace accident insurance costs were down 6.7 percent in the year to the June 2012 quarter. This fall resulted from decreases in ACC levy rates. These decreases were partly offset by a 2.0 percent increase in pay rates.

Other non-wage labour costs (medical insurance, motor vehicles for private use, and low-interest loans) decreased 1.1 percent in the year to the June 2012 quarter. The costs for both motor vehicles for private use and low-interest loans were down, while the cost of medical insurance was up (reflecting higher premiums). A fall in fringe benefit tax (FBT) rates on 1 October 2010 (which occurred at the same time as a fall in the personal income tax rate) had a downward impact. This is because all four quarters in the 2012 tax year were affected by the change in FBT rates, compared with only two quarters in the 2011 tax year.

See also:  Labour Cost Index (All Labour Costs): June 2012 quarter  –  Information release