6 Aug 2014

Unemployment at lowest since 2009

9:32 pm on 6 August 2014

Unemployment has fallen to its lowest level in more than five years, due to firms taking on more workers. But despite robust economic growth, pay rises remain muted.

Unemployment has remained above 8 percent in provinces such as Northland, Hawke's Bay and Wairarapa.

Official figures show the number of people out of work stood at 5.6 percent in the three months to June 2014. Photo: RNZ

Buoyed by the growing economy, firms are hiring more people. Employment rose by 0.4 percent to more than 2.33 million people.

Annual employment grew 3.7 percent - its fastest pace in a decade.

The rebuilding of earthquake-hit Christchurch is behind the this, and while analysts expect that pace to ease, the construction boom is expected continue to support job growth.

Canterbury accounted for almost half of the growth, led by more jobs in construction to rebuild earthquake-hit Christchurch.

While Canterbury's unemployment rate is at 2.8 percent, the number of people out of work in Northland rose to 8.3 percent.

Unemployment declined to its lowest level since March 2009 and New Zealand now has the ninth lowest unemployment rate among rich nations.

But wage growth remained subdued. It grew a modest 1.7 percent in the quarter, due mainly to an increase in the minimum wage, which put it barely above inflation of 1.6 percent.

Unions say workers are not getting their fair share, despite a fast growing economy. FIRST Union general secretary Robert Reid says it has negotiated pay increases of between 2.5 percent to 3.5 percent for most of its members but workers are still struggling to cope with rising mortgage and electricity bills.

Statistics New Zealand said if the 50 cent increase in the minimum wage was excluded, wages matched the rise in the cost of living.

Westpac senior economist Michael Gordon said rising immigration and low inflation was keeping a lid on pay.

"When it comes to wage negotiations, if there's not a lot of scarcity value for workers - or at least much less so than there was before the recession - and cost of living adjustments haven't needed to be terribly large, then you don't tend to find very large wage gains."

The New Zealand dollar fell almost one US cent following the larger than expected fall in prices at the dairy trade auction. On Wednesday evening it was trading at 84.33 US cents, 90.64 Australian cents, 49.97 British pence, 0.6308 euro, 86.47 yen and 5.20 renminbi.