Wages ‘double’ but still struggling to get ahead

Despite earning twice what she did 10 years ago, and taking on an extra six hours’ work a week on top of her day job, Kate says it is becoming increasingly hard to get ahead.

The solo mother of one, who did not want to be identified, said she could make ends meet with her normal salary but nothing beyond that.

‘‘I feel like I am penny-pinching more now. I notice it the most in the cost of food but all expenses seem to be more. My freelancing supplements my income which allows me to put some money aside for emergencies and hopefully a house one day. I wouldn’t be able to do that with just my job any more.

‘‘I feel like that sounds a bit privileged as I do have enough, which is more than a lot of people. But things are definitely increasingly tight.

‘‘My grocery budget used to be $120 a week and now I have to be careful to keep it under $180.’’

Boston Consulting Group’s latest sentiment survey shows she is not alone. It is conducted every six months and found more than half of people feel that they are earning less and spending more than they were six months ago.

Lead author of the survey Phillip Benedetti said while people might be seeing more money in the bank at the end of each month, inflation was going up so much faster that relative purchasing power for nondiscretionary items had decreased despite their increased wages.

People were expecting to pay more for necessities like food, petrol and power, and were holding off on discretionary purchases or ‘‘nice-tohaves’’. ‘‘In other words, you have more money but the prices of goods and services have risen so fast that your money is not going to buy you much more than it did before.

‘‘In some instances, it may buy you less,’’ Benedetti said.

In the last half-year survey, New Zealand was just coming out of Covid and lockdowns, and suddenly there was a lot more choice in terms of sanctioned activities and ability to spend money.

‘‘People felt richer and at the same time that may have driven up prices. Six months on, we are seeing that slow down.’’

The survey also found that consumers were planning to adjust their spending plans for the next six months in response to inflation impacts and rising interest rates.

But travel – particularly domestic travel – continued to be high on the discretionary spend agenda, with 37% of Kiwis saying they planned to travel internally in the next six months.

The results of this survey was on par with global inflation, Benedetti said.

He said one of the biggest changes seen between the last halfyearly survey BCG did in April and this one was that people were spending less on home improvement because they were thinking ‘‘I’m not sure if I can afford to do these big things right now’’.

But New Zealand might be feeling the effects of this a bit more than our counterparts in Australia or Canada because our wages had, historically, been very low to begin with, he said.

‘‘So, while the average hourly wage has risen, it is not enough to keep up with the current rates of inflation we are seeing,’’ Benedetti said.

Despite New Zealand likely heading into a recession, people were feeling secure in their jobs and felt they could switch far more easily, with 93% of people feeling highly confident in their jobs for the next six months and that their skills will be in high demand.

But the survey found workers were having to do more in order to acquire higher wages, such as doing the work of two people in one role.

‘‘This hints at a tight labour market, where jobs are plenty and workers have the option to move jobs and ask for higher wages and also for better-resourced workplaces where they are not doing the work of several people,’’ Benedetti said.