Wage growth at small NZ firms outpaced Australia, UK - Xero

Source: 1News

The growth in wages of workers at small New Zealand businesses last month outpaced Australia and the UK - but it wasn't enough to keep up with high inflation.

Restaurant (file photo).

Data released on Thursday from accounting software Xero found wages at local small businesses grew 5.3% in May this year compared to 12 months ago.

Wages increased the most in the construction, manufacturing and hospitality sectors.

The number of jobs was also on the rise, increasing 4.1% in the year to May.

Xero said the rise in pay was fuelling job growth, especially in the professional services, manufacturing and construction sector. But, it said some sectors - like agriculture and hospitality - continued to struggle to attract staff.

In comparison, wages grew 5% at the same time in the UK, while that figure was 3.7% for Australia.

For job numbers, the UK saw a 5% drop and Australia saw an increase of 0.3% after two months of decreases.

Xero's Charlie Nicholls said the results were an "encouraging sign for the future" as New Zealand's tourism and hospitality sectors started to see the benefits of more international travel.

"These higher wages are helping small businesses to attract more staff in a very tight labour market. It can be extremely hard for small businesses to compete with the salaries of big businesses, but this job growth data shows so far our local small business economy appears to be faring well," Nicholls said.

"With more talent, the local small business economy can continue to push forward, but higher wages do come with their own set of challenges for Kiwi small business owners and more pressure to increase sales."

But, she noted that despite the strong rise, "it is still not keeping up with inflation which implies real wages are still declining".

She added that despite the growth, there was a smaller increase in sales in New Zealand (5.57% rise between May 2021 and 2022) compared to Australia (10.8%) and the UK (14.3%).

"As inflation continues to impact Kiwis and their spending habits, it’s likely sales will remain muted as we navigate these tricky economic times."

Consumer confidence was found to be at an all-time low in Westpac's consumer survey released last week.

Inflation hit 6.9% in the March 2022 quarter.