Hawke's Bay wages rise, but is it more than inflation?

Despite wage rises, you might not be getting any further ahead. Photo/File

The average Hawke's Bay worker has $130 more in their pocket each week compared to four years ago, but economists say rising household costs and working longer hours might cancel any real increase out.

Latest Statistics New Zealand figures showed the median wage in the Hawke's Bay and Gisborne area was $44,200 in 2016 - up from $37,440 in 2012, about 18 per cent.

The figures said between 2015 and 2016 median weekly wages increased from $770 to $850 - an increase of $4000 a year.

However, economists say price growth for goods and services of around 2 per cent per year begin to add up. Household living costs also increased proportionally more for lower-expenditure households and beneficiaries than higher-expenditure households, SNZ figures showed.

Noticeable increases in common good prices, such as a 14 per cent increase in the cost of fruit and vegetables in the last year, could lead people to believe overall prices were growing at a much faster rate than 2.2 per cent.

This, however, was the highest annual growth in the CPI since September 2011.

Council of Trade Unions economist Bill Rosenberg said low average wage increases of around 2 per cent, although broadly equal to inflation, were hurting workers, especially low-wage earners.

"What we're seeing is people working more hours and also more people getting jobs," Rosenberg said.

"People are feeling fairly pushed because of various pressures in the household budget and deciding both [parents] will have to work to make ends meet.

"At the moment, I'm very concerned we're trapped in a low-wage rut that's very difficult to get out of in the current circumstances.

"It's not good for New Zealand because it encourages low productivity."

Workers nationwide worked an extra 0.6 per cent in the last year.

Sean Bevin, from Napier-based Economic Solutions, said growing wages and creating highly paid jobs across the region would require focus on growing already strong sectors.

"We have a very strong primary production sector. In my view, that's where our growth is based and our strengths are based," Bevin said.

However, he said Kiwi ingenuity in developing ideas and technology had given some Bay businesses a foothold into the international market.

"I don't think it's necessarily about one industry ... There a lot of firms in Hawke's Bay that are doing a lot of work overseas, below the radar, and are doing extremely well.

"Across the board really, if we can make small leaps in processing, automation and increased productivity, that will definitely help the cause."

The consumer price index recently rose higher than wage growth for the first time in six years. This meant costs of goods and services were likely to rise slightly more than wage growth, at least in the near future.

Westpac senior economist Satish Ranchhod said this would likely put some pressure on wages, and workers would start to feel a pinch.

"Consumer price tends to start rising and then that gets factored into wage growth, and combine that with a firming economy, we should see some wage growth in the next couple of years."