Real wages fell for quarter

Press, 18 December 1986, Page 3

Real wages fell for quarter

Wellington reporter

The after-tax purchasing power of full-time wage: and salary earners fell during the September quarter, more so for those on low incomes.

The Statistics Department’s index of real disposable income declined 2.3 per cent after rising for each of the three previous quarters. The index rose 4.3 per cent, however, during the 12 months to the end of September compared with a 4.6 per cent fall in the previous year.

The fall in the September quarter resulted from a 1.2 per cent rise in average gross incomes being more than offset by a 3.3 per cent increase in the consumers price index and an 0.7 per cent increase in average tax rates during the period. Real disposable incomes for those on more than $30,100 a year — the highest-paid fifth of all wage and salary earners — declined 2.3 per cent. For the lowest-paid fifth, receiving less than $14,300, disposable incomes slipped 2.5 per

cent. During the previous nine months, real disposable incomes rose slightly more for the lowest group than for the highest. For households in which the principal earner is a full-time wage and salary earner, purchasing power declined 2.4 per cent in the September quarter but still increased over the preceeding 12 months. In the previous year, the index for households fell 5.5 per cent. National superannuitants had a more marked

decline in their real disposable incomes, of 3.2 per cent, in the latest quarter. For both single and married superannuitants the fall was 3.2 per cent, after a 0.5 per cent decline in the June quarter. The Opposition’s spokesman on employment, Mr Bill Birch, said the statistics showed that average families had suffered substantially under the Labour Government. The real disposal incomes of households were now 5 per cent less than they were in June, 1984,

before the election, he said.

The reduction in spending power was in spite of big pay increases in last year’s wage round. Those had been insufficient to offset “huge inflationary forces” experienced for the last 2'/ 2 years, Mr Birch said.

He predicted worse to come for wage and salary earners in view of the Reserve Bank’s forecast that inflation for the year to next March would be 17.5 per cent and relatively low settlements in the current wage round.