NZ's reputation of having a high quality of life could be under threat, economist says

Monday, 9 July 2018

Productivity Commission director of economics and research Paul Conway says technology can improve productivity.

Low wages have been compensated by a sense of work-life balance and a high standard of living, but longer commutes, congestion and rising living costs in Auckland could put this at risk, an economist says.

Auckland University economics professor Robert MacCulloch said New Zealand was slipping towards becoming a low wage economy, as most Kiwis worked longer but were paid less than their professional counterparts in other parts of the world.

'When employers in New Zealand want to hire talent from overseas that offer less pay than their counterparts overseas, New Zealand's competitive advantage has been a good quality of life,' MacCulloch said.

'But Aucklanders will know their commutes are getting longer because of traffic and congestion, even during holidays and weekends there's traffic and this can put a damper on how you view your quality of life. Wages have stagnated for the past few quarters but housing costs have gone up hugely.'

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Economist Robert MacCulloch says congestion, rising costs and low wages could impact New Zealand's quality of living.

Consultancy giant Mercer's Quality of Living Index ranked Auckland third out of 450 cities.

Cigna's global annual wellbeing survey found the proportion of respondents who felt they had a good work life balance had dipped from 65 per cent in 2016 to 61 per cent in 2018.

The survey also found work and finances were the leading causes of stress for most respondents. New Zealand rated higher than Australia for stress caused by work, but higher than Britain for both stress from work and money.

MacCulloch said the country's low productivity was used by most economist and employers to justify low wages.

'Employers say productivity needs to rise in order for wages to as well, but most employees feel they would be more motivated if their wages were higher.

'If you're a nurse or a teacher it can be demoralising to be paid a low wage for the work you're doing and the education you have,' MacCulloch said.

Labour productivity continues to lag behind that in Australia, according to the latest Statistics New Zealand figures. From 1996 to 2017, growth in labour productivity was 1.5 per cent a year in New Zealand, but 2.2 per cent in Australia.

The Productivity Commission also said wages could only rise if New Zealand's productivity rose.

The Commission's economics and research director Paul Conway said: 'The hours worked per capita are the highest in the OECD, but the value produced from the New Zealand labour force is the lowest. Our wages are lower than other OECD countries again because our productivity is lower.'

Investing in technology was the answer to driving productivity, Conway said.

'Technology is a double-edged sword, it lifts productivity on the one hand, but there are issues around who benefits from that on the other hand and people worried about losing their jobs.

'But that's a good problem to have.'