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.

Friday Graph: Public Sector ‘Austerity’?

Statistics New Zealand released its December quarter 2011 employment numbers last week and this week’s Friday Graph plots the public sector numbers on a calendar year average basis.

click the graph to enlarge

The blue columns show that total filled public sector jobs have risen every year since 2005.  The rise between 2011 and 2005 is 9.8 percent with no signs of any slowdown.

The red line shows that total filled public sector jobs have risen from 22.1 percent of total filled jobs in the private sector in 2005 to 24.1 percent in 2011.

Not shown in the graph is the drop in private sector total filled jobs from 1.404 million in 2005 to 1.359 million in 2011.  Private sector filled jobs in 2011 were only 0.5 percent up on 2005.

Not much evidence here of overall public sector cutbacks to date, or of a material rebalancing of the economy in favour of private enterprise and growth.

In interpreting these figures, bear in mind the following points:

  • Total filled jobs is not a good measure of numbers employed as some people have more than one job.
  • SNZ’s definition of public sector is very broad; it includes local government.  That is why the number of filled jobs is so large.
  • The State Services Commission has reported a small reduction in total full-time equivalent employees in (central) government departments ­– from 44,672 in June 2009 to 43,595 in June 2011.
  • SNZ has total filled jobs in public administration and safety dropping by 1,000 (rounded) between June 2009 and June 2011 (from 92,000 to 91,000).