Friday Graph: Public Sector Wage Rates Holding Gains on Private Sector

Last week’s Friday Graph showed how much the public sector had outstripped the private sector in terms of filled jobs in recent years – and seemed to be holding its gains.

This week’s Friday Graph shows that much the same applies in respect of the latest Statistics New Zealand release of estimates of the rises in hourly labour costs.

click the graph to enlarge

The sold blue and purple lines show real hourly earnings for the public and private sectors respectively against the scale on the left hand side of the chart.  Expressed in June quarter 2006 dollars using the consumers price index (all groups) the average hourly wage rate in the December quarter 2011 was $29.21 in the public sector compared to $21.18 in the private sector.

The green line shows that the public sector average has risen sharply relative to the private sector average since the mid 1990s, (see the right hand scale).  The thick green line is a smoothed version of this curve.  (For the technically minded it is a Hodrick Prescott filter).

These graphs complement the 30 September 2011 Friday Graph here that showed that the burgeoning growth in the public sector has been associated with a squeeze on the competitiveness of the traded goods sector.

The Key government’s key economic decision in the term of the last parliament was arguably the decision to slow the growth in public spending rather than to roll the excesses back to a material degree.