New Zealanders are feeling less optimistic about the labour market with fewer people expecting a pay rise any time soon. 

The Westpac McDermott Miller employee confidence index fell 2.9 points to 114.5 in the September quarter, where a reading of 100 separates overall optimism from pessimism. The decline was driven in part by a net 27.5 percent of the 745 respondents in paid work expecting a pay rise in the coming year, the lowest level in three years, and down from 32.9 percent in June. 

“The lack of confidence around income growth matches what we are seeing in hard data,” Westpac New Zealand chief economist Dominick Stephens said. “Wage growth has remained stubbornly low in recent years, even as economic activity has firmed.”

Government data show average weekly earnings for a full-timer in the private sector rose 3.5 percent to $1,104.70 in the June quarter from a year earlier, outpacing the 3.3 percent increase in hourly wages to $28.97. Average weekly ordinary hours rose an annual 0.3 percent to 38 hours, the most since records began in 1989. 

The Westpac McDermott Miller survey shows the present conditions index fell 3.2 points to 117.6 and the future expectations index fell 2.7 points to 112.5. 

The dimming optimism matches similar declines in consumer and business sentiment surveys but comes at a time when the government has reached high profile collective and pay equity settlements with public sector staff such as nurses and social workers. 

Average public sector weekly earnings rose an annual 2.2 percent to $1,473.58 in the June quarter, compared to a 1.5 percent increase in the average wage to $39.04. 

That divide shows up in today’s survey, with public sector employee confidence index up 4.5 points to 119.8, while the private sector equivalent fell 3.1 points to 116.

The survey of 1,556 people asks everyone about their impressions of the labour market and goes on to ask further questions about earnings and job security of those in paid work. 

A net 22.8 percent of paid workers said they’d had a pay rise over the past year, down from 26.4 percent in June. A net 10.3 percent said they felt more secure in their job compared to 14.2 percent in June. 

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