Carmen is a social issues and rural reporter at the Bay of Plenty Times

City booms but wages low

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Tauranga economy expands faster than national average but salaries still lagging.
Aerial of Tauranga City.
Aerial of Tauranga City.

Economic growth in Tauranga has outstripped the national average on almost every indicator a new report shows. However, incomes have continued to lag behind — with one business leader saying "our low wage reputation is not really something we should be proud of".

The survey commissioned by Priority One and compiled by Infometrics revealed economic growth in the city jumped 4.6 per cent in 2015 compared with the national average which climbed 3.6 per cent.

Last year there were 61,057 jobs in the city, up 3.7 per cent on 2014, and 14,297 business units (one office or factory) in 2015 — a hike of 2.6 per cent over the corresponding timeframe.

However, according to Infometrics' latest statistics the standard of living and mean annual earnings in Tauranga for 2014 was $49,780 compared with the national average of $54,230.

Tauranga has had slightly higher increases in annual earnings over 2014 and 2015 than the national average, so hopefully this gap is closing.
Annie Hill, Priority One project manager

Priority One projects manager Annie Hill said Tauranga was set up for the future but acknowledged annual earnings were less than the national average which was "unfortunate".

Read more: City consents smash records

The trend tended to reflect the pay-off that people were prepared to make "to live somewhere with such a great lifestyle and a lower cost of living compared to, say, Auckland".

"The job market is all about supply and demand, so employers will pay what they need to pay in order to secure the skilled and unskilled staff that they need. However, Tauranga has had slightly higher increases in annual earnings over 2014 and 2015 than the national average, so hopefully this gap is closing."

Business growth was also being driven by the city's competitive advantages such as the availability of reasonably priced land, the ability to attract skilled and talented people, and the competitiveness and efficiency of the Port of Tauranga and access to international markets, she said.

It was currently working with nine businesses "that were at various stages of their decision-making process in terms of relocating here".

"We are also benefiting from the skyrocketing housing costs in Auckland and their increasing issues with congestion."

Priority One project manager Annie Hill.
Priority One project manager Annie Hill.


Tauranga Chamber of Commerce chief executive Stan Gregec said businesses were running red hot in a number of key sectors and that confirmed Tauranga's runaway growth over the past couple of years however, "our low wage reputation is not really something we should be proud about".

"While it's no longer the case of $10/hour Tauranga, we still don't have the depth or scale of industry that supports a high wage economy across the board. This remains something of a challenge for us."

However, there was a lot of entrepreneurial activity and business start-ups.

"We're also seeing a lot of migrants moving here, many of whom have no choice but to start up their own business — especially mature people with experience that is not always to assimilate into Tauranga's type of economy."

Tauranga mayor Stuart Crosby said Tauranga had been building its economy since the financial crisis and "there is a lot more growth on the horizon".

The city benefited from the fact it did not rely on one particular activity, "we are blessed with a broad range of activities from agriculture, to horticulture right through to manufacturing. Sometimes a business might be peaking and another one could be struggling so when you average it out we do quite well."

Mr Crosby said wages needed to increase and in his view they would start to exceed the national average over a period of time because of the growing economy.

Tauranga Budget Advisory Service manager Diane Bruin said the amount of wage earners seeking help had climbed by 25 per cent in the past 12 months.

Factors including rising rents had created a "vicious circle" and incomes had failed to keep up, she said.

"I believe we will get there but wages are a little bit slower moving in this area. I think it all comes around when we get a bit of confidence... it goes hand in hand."

Today both people in a family had to work, "there is no choice really".

Read more: Buyers advised to act quickly in competitive Bay market

Tauranga father-of-two Josh Cole told the Bay of Plenty Times Weekend he spent 19 years working fulltime getting the minimum wage in supermarkets before branching out into his own gardening business last year.

"It was alright when I was younger but it got too hard to keep it up once I had kids, it was impossible and pretty crazy."

Now he was earning basically the same wage for fewer hours and enjoyed the challenge of being his own boss.

Mr Cole and his wife were receiving Job Seeker support but he also got that previously because they were still under the income threshold, he said.

- Bay of Plenty Times

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