21 Jan 2014

Expect wage increases, says Labour

4:20 pm on 21 January 2014

The Government is predicting a jump in wages this year.

Labour Minister Simon Bridges says wages will increase this year as a result of government policies, although he wouldn't say by how much.

"Our sensible policies have made businesses more competitive and more confident. We've already seen real after tax wages go up, we know businesses think they can go up so we expect to see them increase - but it's not the role of government to put a number on that."

The Labour Party says recent economic forecasts suggest the country is in for a blockbuster year. It says workers should expect a pay rise of at least 4 percent.

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Economists have forecast good fortune for the country, with one leading global bank, HSBC, describing New Zealand as the rockstar economy of 2014.

Labour MP Andrew Little says that means people should prepare for a pay rise he says anything less would suggest employers were not passing on the benefits of the projected boom.

Andrew Little.

Andrew Little. Photo: LABOUR PARTY

The Council of Trade Union's economist Bill Rosenberg says there have been previous periods of economic growth when workers have been told to wait, and wage increases have never eventuated.

He urged businesses to start treating wages as a way to keep workers, and not simply as a cost.

Mr Bridges says Labour Party's policies would be a disaster for both job and wage growth.

An economist is warning that while New Zealand's growing economy is likely to bring pay rises and lower unemployment , its poor productivity must improve if growth is to continue.

Chief economist at ANZ bank Cameron Bagrie says among OECD nations New Zealand is likely to be the top performing economy this year.

But, he says while that may bring more pay increases and reduce unemployment, New Zealand's poor productivity could hold back growth.

He says while the economy is ticking along nicely, resource pressures could trigger inflation and prompt the Reserve Bank to raise interest rates bring the current economic expansion to a halt.