LABaTR MOBILITY BE;?WEEN NEW ZEALAND AND AUSTRALIA
R.L. St. Hill
Agricultural Economics
&
Marketing Department
Research Report No. 180
July 1986
Agricultural Economics Research Unit
Lincoln College
Canterbury
New Zealand
ISSN 0069-3790
T H E A G R I C U L T U R A L ECONOMICS R E S E A R C H U N I T
Lincoln College, Canterbury, N.Z.
The Agricultural Economics Research Unit (AERU) was established in 1962 at Lincoln
College, University of Canterbury. The aims o f the Unit are to assist by way of e c o ~ o m i c
research those groups involved in the rnany aspects of New Zealand primary production
and product processing, distribution and marketing.
Major sources of funding have been annual grants fronl the Department of Scientific
and Industrial Research and the College. However, a substantial proportion of the
Unit's budget is derived from specific project research under contract to government
departments, producer boards, farmer organisations and to commercial and industrial
groups.
The Unit is involved in a wide spectrurn of agricultural economics and management
research, with some concentration on production economics, natural resource
economics, marketing, processing and transportation. The results of research projects
are published as Research Reports or Discussion Papers. (For further information
regarding the Unit's publications see the inside back cover). The Unit also sponsors
periodic conferences and seminars on topics of regional and national interest, often in
conjunction with other organisations.
The Unit is guided in policy forn~ationby a Review Committee first established in 1982.
The AERU, the Department of Agricultural Economics and Marketing, and the
Department of Farm Management and Rural Valuation maintain a close working
relationship on research and associated matters. T h e heads of these two Departments
are represented on the Review Committee, and together with the Director and
Principal, constitute an AERU Management Committee.
UNIT REVIEW COMMITTEE
R.D. Chamberlain
(Senior Vice-President, Federated Farmers of Kew Zeaiand Inc.)
A. C. Rayner, B.Com(Hons), M.Soc.Sc.
(Professor of Agricultural Economics, Lincoln ~ o l l e ~ e )
P. J. Rankin, M.A.. M.P.A.
(Director, New Zealand Planning Council)
Professor B.J. Ross, M.Agr. Sc.
(Principal of Lincoln College)
R G. Lattimore, B.Agr.Sc., M.Agr.Sc., Ph.D.
(Director, Agricultural Economics Research Unit, iincoln College) (ex officio)
E.J. Neilson, R.A.,B.Com., F.C.A., F.C.I.S.
(Lincoln College Council)
RL. Sheppard, B.Agr.Sc.(Hons), B.B. S.
(Assistant Director, Agricultural Economics Research Unit, Lincoln College) (exofficio)
P. Shirtcliffe, I3.Com., ACA
(Nominee of Advisory Committee)
P.G. Bushnell, B.Agr.Sc., M.Agr.Sc. Ph.D.
(Director, Economics Division, Ministry of Agriculture and Fisheries)
R.T.J. Clark, M.Sc., Ph.D.
(Chief Director, Department of Scientific and Industrial Research)
UNIT RESEARCH STAFF: 1086
Director
R G . Lattimore, B.Agr.Sc., M.Agr.Sc.,Ph. D.
Assistant Director
R E . Sheppard, B.Agr.Sc.(Hons), B.B.S.
Research Fellow in AgricuLt~raLPoLicy
J.G. Pryde, O.B.E., MA., F.N.Z.I.M.
Senior Research Economist
R D . Lough, B.Agr.Sc.
Research Eco~zornzst~
D.E.Fowler, B.B.S., Dip. Ag. Econ.
G. Greer, B.Agr.Sc.(Hons)
S.K. Martin, B.Ec., M.A.(Hons.), Dip.Tchg.
KG. Moffitt, B.Hort.Sc.. N.D.H.
R esearcb SocioLogist
J. R Fairweather, B.Agr.Sc., B.A.,M.A., Ph. D.
tlssista?zt Research Economists
J. E. Chamberlain, B.Agr.Sc.
T.P. Grundy, B.Sc.(Hons), M.Com.
P.J. McCartin, B.Agr.Com.
S'ec~.etary
R. Searle
CONTENTS
Page
LIST OF TABLES
LIST OF FIGURES
PREFACE
ACKNOWLEDGEMENTS
CHAPTER 1
I N T R O D U C T I O N A N D SUMMARY
1.1
Purpose of t h e R e s e a r c h
1. 2
Summary o f R e s u l t s
CHAPTER 2
REVIEW OF A V A I L A B L E D A T A O N
MIGRATION A N D REMUNERATION
BY OCCUPATION
2. 1
Coverage of Data
2. 2
M i g r a t i o n Data: Department
of S t a t i s t i c s
2. 3 Nominal a n d P r e v a i l i n g
Weekly Wage R a t e s :
Department of S t a t i s t i c s
2. 4
Award R a t e s a n d Mean Weekly
E a r n i n g s : A u s t r a l i a n Bureau of
Statistics
2. 5 Pay R e s e a r c h : Pay R e s e a r c h U n i t ,
Department of S t a t i s t i c s
2. 6
P o p u l a t i o n C e n s u s : New Z e a l a n d
and A u s t r a l i a
2. 7
P r i v a t e S e c t o r Remuneration
Data: Hay A s s o c i a t e s
2. 8
P r i v a t e S e c t o r Remuneration
Data: PA Management
CHAPTER 3
T H E R A T I O N A L E F O R FRINGE BENEFITS
Introduction
3.1
Employer/Employee P r e f e r e n c e s
3. 2
3. 3
Fringe B e n e f i t s a s an
A d j u s t m e n t Mechanism
F r i n g e B e n e f i t s and
3. 4
X-efficiency
3 . 5 Conclusion
CHAPTER 4
ANALYSIS O F M I G R A T I O N D A T A
4. 1
Level of A g g r e g a t i o n
4. 2
P a t t e r n s of M i g r a t i o n
4. 2. 1
Emigration
4 . 2. 2
Immigration
4 . 2. 3
Net E m i g r a t i o n
4. 3
Implications
11
11
11
14
15
16
CONTENTS
(
continued)
Page
CHAPTER 5
REMUNERATION DATA
5. 1
Nominal a n d P r e v a i l i n g Weekly
Wage R a t e s
5. 1 . 1
Wages D r i f t i n New
Zealand
5 . 1 . 2 N o m i n a l Wage R a t e I n d i c e s
New Z e a l a n d a n d A u s t r a l i a
5. 2
R e m u n e r a t i o n D a t a : Hay A s s o c i a t e s
The I m p o r t a n c e o f F r i n g e
5 . 2. 1
B e n e f i t s i n New Z e a l a n d
5. 2. 2 G r o w t h o f T o t a l
Remuneration i n
New Zealand
5. 3 R e m u n e r a t i o n D a t a : PA M a n a g e m e n t
Consultants
5. 3 . I
Classification of
Occupations
5. 3. 2 D i f f e r e n c e s i n
Remuneration between
A u s t r a l i a and N e w Zealand
5. 3. 3 F r i n g e B e n e f i t s i n New
Zealand and A u s t r a l i a
R e l a t i v e Changes i n T o t a l
5 . 3. 4
Cash Compensation i n
New Z e a l a n d a n d A u s t r a l i a
CHAPTER 6
A N EST1 MABLE MIGRATION MODEL
6. 1
Background
6. 2
Data
6. 3
T h e Model: E m i g r a t i o n
6. 4
The Model: I m m i g r a t i o n
6. 5
Regression R e s u l t s and Discussion
47
47
CONCLUSION
55
CHAPTER 7
FOOTNOTES
REFERENCES
APPENDICES
48
50
52
53
L I S T OF TABLES
Page
Table
1
Occupation Categories Migration
Wages D r i f t b y O c c u p a t i o n
Ratio of Total Remuneration t o
Basic Remuneration - New Zealand
Indices of Total Remuneration New Z e a l a n d
Occupation Categories
-
PA D a t a
R a t i o o f Median C o m p e n s a t i o n
b e t w e e n A u s t r a l i a a n d New Z e a l a n d
R a t i o of I n t e r q u a r t i l e Ranges of
Compensation between A u s t r a l i a
a n d New Z e a l a n d
38
Occupational C l a s s i f i c a t i o n s used i n
Regression Analysis
49
Regression Results
54
L I S T OF F I G U R E S
Page
Figure
1
An I s o p r o f i t F u n c t i o n
Fringe Benefits
An I n d i f f e r e n c e Map
Fringe Benefits
-
-
C a s h Wages a n d
12
C a s h Wages a n d
13
The E q u i l i b r i u m Cash W a g e s - F r i n g e
B e n e f i t s Combination
Non-Wage
Market
Adjustment i n t h e Labour
Emigration by Occupation
21
Immigration by Occupation
23
Net E m i g r a t i o n by O c c u p a t i o n
24
N o m i n a l Wage R a t e s I n d i c e s
and A u s t r a l i a
-
New Z e a l a n d
30
R a t i o of T o t a l Cash Compensation t o
B a s i c R e m u n e r a t i o n - New Z e a l a n d
R a t i o of T o t a l Cash Compensation t o
Basic Remuneration - A u s t r a l i a
R e l a t i v e Changes i n T o t a l Cash compensation
New Z e a l a n d
-
'
45
R e l a t i v e Changes i n T o t a l Cash Compensation Australia
46
PREFACE
The p r o x i m i t y o f t w o s i m i l a r s o c i e t i e s a n d e c o n o m i e s s u c h
a s New Z e a l a n d a n d A u s t r a l i a c r e a t e s a n e x c e l l e n t
opportunity
for
t h e development
of
labour flows i n accordance with
c o n v e n t i o n a l economic theory.
Over
recent
years
there
have
b e e n l a r g e movements o f p e o p l e i n b o t h d i r e c t i o n s a s t h e y have
sought t o achieve t h e i r objectives
through a c t i v i t y i n the
other country.
T h e s e movements
provide
an excellent
opportunity for a
study of
the
reasons
f o r people
moving and
the
relative
importance of
t h o s e reasons f o r d i f f e r e n t l a b o u r groups.
The
s t u d y r e p o r t e d i n t h i s p a p e r w a s r e q u e s t e d b y t h e New Z e a l a n d
Planning Council a s an input t o t h e d e s c r i p t i o n of t h e l i k e l y
e f f e c t s o f d i f f e r e n t e c o n o m i c s i t u a t i o n s u p o n t h e movement
of
labour.
Mr
R. L. S t H i l l , a l e c t u r e r i n t h e A g r i c u l t u r a l E c o n o m i c s
and Marketing Department, undertook t h e s t u d y .
A s
w i t h many
Mr St H i l l
encountered severe
economic r e s e a r c h programmes,
d a t a d i f f i c u l t i e s a n d i t was d i f f i c u l t f o r d e f i n i t i v e a n s w e r s
be
given.
However,
the
p a p e r makes
a significant
to
c o n t r i b u t i o n i n i d e n t i f y i n g t h e d a t a problems t h a t e x i s t and i n
p r o v i d i n g a methodology t h r o u g h which t h e
s u b j e c t c a n be
examined.
I n publishing
w i l
deficiencies
positive steps w i
i n the
future;
analysis.
t h i s Research Report,
we h o p e t h a t
the
data
l
be
more w i d e l y r e c o g n i s e d
a n d t h a t some
l l be t a k e n t o p r o v i d e c o n s i s t e n t d a t a
series
series
that
lend
themselves t o appropriate
G. L a t t i m o r e
Director
R.
ACKNOWLEDGEMEMTS
The work r e p o r t e d i n t h i s R e s e a r c h R e p o r t was f u n d e d b y t h e
Economic
M o n i t o r i n g G r o u p o f t h e New Z e a l a n d P l a n n i n g C o u n c i l ,
which s u p p o r t is g r a t e f u l l y acknowledged.
The a u t h o r would l i k e t o e x p r e s s a p p r e c i a t i o n f o r
help
i n
this
research
f r o m many p e o p l e .
D r R. D . B e d f o r d ( D e p a r t m e n t
of
Geography,
University
of
Canterbury)
provided
data
on
migration
and
discussed
issues
relating
t o
their
use and
interpretation.
Mr J . C. P r a t t a n d Mrs B. B a i n ( P A M a n a g e m e n t
Consultants, Wellington) provided d a t a from t h e i r comprehensive
s a l a r y s u r v e y s and d i s c u s s e d a number o f a s p e c t s o f t h e
market
Mr
W.
E.
Heppleston
and
Mr J. S.
for
managerial
skills.
Thompson ( H a y A s s o c i a t e s
Hew Zealand
Limited,
Auckland
and
respectively)
provided
summary
data
from t h e i r
Wellington
Mr
D.
J.
Cox
(Department
of
Statistics,
s a l a r y surveys.
Wellington)
provided
information
on
activities
of
t h e Pay
Researchunit.
Miss K .
PI.
Hanson
and
Mr T.
J.
Woodhouse
(Department
of
S t a t i s t i c s , Christchurch) provided unpublished
d a t a o n w e e k l y wage
rate
indices
and
information
on
their
Dr
J.
Poot (Department of
calculation
and
interpretation.
on
Economics, V i c t o r i a U n i v e r s i t y o f W e l l i n g t o n ) p r o v i d e d d a t a
p u r c h a s i n g power p a r i t i e s .
Without t h e c o - o p e r a t i o n of t h e s e i n d i v i d u a l s and o t h e r s a t
t h e A u s t r a l i a n Bureau o f S t a t i s t i c s i n Canberra and Sydney and
the
George
Forbes
Memorial
Library
at
Lincoln College the
c o n t e n t s o f t h i s r e p o r t would have been v e r y s k e t c h y i n d e e d .
M r M. D. C l e m e s ( D e p a r t m e n t o f A g r i c u l t u r a l
Economics
and
College)
liased
with
the
Department of
Marketing,
Lincoln
S t a t i s t i c s and c a r r i e d o u t a n a l y s i s of nominal
and
prevailing
wage
indices.
P r o f e s s o r G. R . Hawke ( D e p a r t m e n t o f E c o n o m i c s ,
V i c t o r i a U n i v e r s i t y o f W e l l i n g t o n ) commented e x t e n s i v e l y o n
an
earlier
draft
that
was p r e s e n t e d a s a r e p o r t t o t h e Economic
M o n i t o r i n g Group.
F i n a l l y , t w o r e f e r e e s made
a
number
of
suggestions
for
improvement i n t h e a n a l y s i s and p r e s e n t a t i o n .
Although not a l l
t h e i r suggestions a r e incorporated i n t h i s Report, t h e i r advice
is appreciated.
CHAPTER 1
INTRODUCTION
1. 1
Purpose of
the Research
New Z e a l a n d a n d
Australia
are
two
countries
that
have
always
had
close
cultural
and economic t i e s .
T r a v e l b y New
Zealand and A u s t r a l i a n c i t i z e n s between t h e
two
countries
is
unrestricted,
except
that
( s i n c e mid
1981)
New Z e a l a n d o r
A u s t r a l i a n c i t i z e n s e n t e r i n g A u s t r a l i a f r o m New Z e a l a n d r e q u i r e
a
valid
passport.
New
Zealanders
can
f r e e l y s e e k work i n
Zealand.
A u s t r a l i a a n d A u s t r a l i a n s c a n f r e e l y s e e k w o r k i n New
Indeed,
the
two
c o u n t r i e s have been d e s c r i b e d a s forming one
l a b o u r market ( Blyth, 1985).
A t times i n t h e past, t h e r e has been a net population
gain
Zealand
as
a r e s u l t of trans-Tasman m i g r a t i o n but i n
to
New
Zealand
have
most r e c e n t y e a r s n e t p o p u l a t i o n l o s s e s
to
New
( Department
of
S t a t i s t i c s , 1985).
The r e v e r s a l h a s
occurred
of t e n been e x p l a i n e d i n terms of r e l a t i v e economic
performance
A s A u s t r a l i a n incomes r i s e r e l a t i v e t o
of
the
two c o u n t r i e s .
and
as
New
Zealand
unemployment
rises
New Z e a l a n d i n c o m e s
relative
to
Australian
unemployment
people
emigrate
t o
Australia.
conform
even
I f New Z e a l a n d a n d A u s t r a l i a n l a b o u r m a r k e t s
approximately t o
the
neoclassical
economic
model o n e would
expect
trans-Tasman
wage
rates
and
unemployment
rates
to
converge
a f t e r l a b o u r h a s b e e n t r a n s f e r r e d from one economy t o
t h e o t h e r f o r l o n g enough.
I n t h e n e o c l a s s i c a l model, whenever
a s h o r t a g e o f l a b o u r i n a n o c c u p a t i o n e m e r g e s , a wage r i s e w i l l
e n t i c e l a b o u r o u t of o t h e r o c c u p a t i o n s and o t h e r economies.
In
f l e x i b l e l a b o u r m a r k e t s a d j u s t m e n t would t a k e p l a c e s m o o t h l y s o
that, relativities
among o c c u p a t i o n s
and
between
countries
would be a d j u s t a s m a r k e t c o n d i t i o n s c h a n g e d .
is
a
growing l i t e r a t u r e on e m p i r i c a l e s t i m a t i o n of
There
Most r e c e n t c o n t r i b u t i o n s
m i g r a t i o n f u n c t i o n s f o r New Z e a l a n d .
a r e i n c l u d e d i n a b i b l i o g r a p h y on l a b o u r markets i n Brosnan and
Most
Morrison (1984) and reviewed i n Brosnan and Poot ( 1 9 8 5 ) .
studies
have
confirmed
that
migration
f r o m New Z e a l a n d t o
among
A u s t r a l i a ( e m i g r a t i o n ) is m o t i v a t e d by economic f a c t o r s ,
others,
and
that
a
sizable
proportion
of
migration
from
In
A u s t r a l i a t o New Z e a l a n d ( i m m i g r a t i o n ) i s r e t u r n m i g r a t i o n .
all
cases
highly
aggregated
time
series
data
have
been
employed,
a
fact
explained
by
the
paucity
of
usable
cross-section data.
The
purpose
of
this
research
was
t o review
data
on
Zealand
for
a
range
of
remuneration i n Australia
and
New
occupations
and
t o
estimate
empirical migration functions.
The o r i g i n a l b r i e f a g r e e d w i t h t h e E c o n o m i c
Monitoring
Group,
who f u n d e d t h e r e s e a r c h , was t o :
g a t h e r d a t a from government
and p r i v a t e sources on
broad
range
of
occupational
margins f o r s k i l l for a
c l a s s e s i n New Z e a l a n d a n d A u s t r a l i a ;
obtain d e t a i l e d d a t a on i n d i v i d u a l occupations f o r
the
most r e c e n t t w o y e a r s ;
o b t a i n d a t a on broad occupational c l a s s e s f o r t h e l a s t
twenty years;
w h e r e p o s s i b l e , o b t a i n wage
rates,
s a l a r i e s and f r i n g e
b e n e f i t s on award and r u l i n g r a t e bases; and
use the data t o f i t migration functions taking i n t o
a c c o u n t b r o a d wage r e l a t i v i t i e s a n d s k i l l m a r g i n s a s w e l l
a s other indicators.
I t w i l l be c l e a r from Chapter 2 where
a v a i l a b l e d a t a are
reviewed,
t h a t i t was n o t p o s s i b l e t o o b t a i n a l l d a t a r e q u i r e d
b y t h e b r i e f a n d t h a t what a r e a v a i l a b l e d o n o t
extend
back
much e a r l i e r
than the l a t e
1970's.
However,
some o f t h e
available
data
are
very
comprehensive,
particularly
remuneration
data f o r white
c o l l a r o c c u p a t i o n s c o l l e c t e d by
some p r i v a t e s e c t o r o r g a n i s a t i o n s .
The p l a n o f t h i s r e p o r t i s a s f o l l o w s .
I n Chapter 2 d a t a
available
on m i g r a t i o n and remuneration by o c c u p a t i o n a r e
rationales
for
fringe
reviewed.
I n Chapter 3 economic
benefits
are discussed.
I n Chapters 4 t o 7 selected data a r e
analysed
with emphasis on implications
f o r labour
market
mobility and f l e x i b i l i t y .
I n Chapters 8 and 9 empirical models
of
trans-Tasman
migration
are
estimated
using
pooled
cross-section
data.
The r e p o r t
c o n c l u d e s w i t h some g e n e r a l
comments.
1. 2
Summary o f R e s u l t s
Some u s e f u l i n s i g h t s i n t o l a b o u r
market
d a t a and labour
markets
themselves
are gained
i n the
research reported.
Important points include:
- d a t a on remuneration is g e n e r a l l y not a v a i l a b l e p r i o r
t o
the l a t e 1970's;
- d e f i n i t i o n s of remuneration and occupation vary widely
among o r g a n i s a t i o n s c o l l e c t i n g d a t a ;
- i n g e n e r a l , incomes a r e h i g h e r i n A u s t r a l i a t h a n i n N e w
Zealand but t h e gap is narrowing;
- t h e r e is q u i t e wide v a r i a b i l i t y
in
incomes
among
o c c u p a t i o n s i n b o t h New Z e a l a n d a n d A u s t r a l i a ;
- some d a t a i n d i c a t e t h a t f r i n g e b e n e f i t s
have
increased
i n i m p o r t a n c e i n New Z e a l a n d ;
- some d a t a i m p l y t h a t r e l a t i v i t i e s i n r e m u n e r a t i o n b e t w e e n
o c c u p a t i o n s i n New Z e a l a n d m i g h t n o t b e a s r i g i d a s i s
p o p u l a r l y believed; and
- using cross-section data,
the
r e s u l t s of time s e r i e s
s t u d i e s t h a t s u p p o r t economic m o t i v a t i o n s f o r migration,
are confirmed.
CHAPTER 2
R E V 1 EW OF AVAILABLE DATA O N MIGRATION A N D REMUNERATION
B Y OCCUPATION
2. 1
Coveraqe of Data
I n both
New Z e a l a n d a n d A u s t r a l i a g o v e r n m e n t a n d p r i v a t e
a g e n c i e s a c c u m u l a t e d a t a on m i g r a t i o n
and remuneration
by
occupation.
It
seems t h a t
i n the
case of
most d a t a t h e
i n t e r e s t of d a t a c o l l e c t o r s i n t h e p u b l i c s e c t o r is demographic
r a t h e r t h a n economic.
The i n t e r e s t h a s b e e n i n c h a r a c t e r i s t i c s
o f m i g r a n t s o r wage
rates
rather
than causal
relationships
among v a r i a b l e s .
Because o f t h i s t h e r e h a s been no a t t e m p t t o
s y s t e m a t i c a l l y d e v e l o p a c o n s i s t e n t framework w i t h i n which
t o
present the data.
For example, m i g r a t i o n d a t a c o l l e c t e d by t h e
D e p a r t m e n t o f S t a t i s t i c s i n New Z e a l a n d i s c l a s s i f i e d a c c o r d i n g
t o the
New Z e a l a n d
Standard C l a s s i f i c a t i o n of Occupations
( Department
of S t a t i s t i c s ,
1976)
whereas
unemployment
data,
n e c e s s a r y f o r e c o n o m e t r i c work i s c l a s s i f i e d by t h e c o l l e c t i n g
agency ( Department of Labour) a c c o r d i n g t o t h e
Employment
and
Vocational Guidance S e r v i c e C l a s s i f i c a t i o n o f Occupations which
is quite different.
I t is not
possible
t o reaggregate
both
s e t s of d a t a i n t o reasonably consistent s e t s .
Data
on remuneration
a l s o v a r i e s w i d e l y among c o l l e c t i n g
agencies.
Comprehensive income d a t a i s c o l l e c t e d
by c e n s u s e s
i n N e w Zealand
and A u s t r a l i a
but
i t i n c l u d e s income f r o m
s o u r c e s o t h e r t h a n n o r m a l work. S u r v e y d a t a c o l l e c t e d b y t h e
Department
of
S t a t i s t i c s i n New Z e a l a n d a n d t h e A u s t r a l i a n
Bureau o f S t a t i s t i c s i s not always v e r y r e l i a b l e and sometimes
is not very disaggregated.
Finally,
survey d a t a c o l l e c t e d by p r i v a t e agencies is v e r y
comprehensive f o r a r e s t r i c t e d range of mainly "white
collar"
o c c u p a t i o n s , n o r m a l l y b e i n g c o l l e c t e d f o r management c o n s u l t i n g
purposes.
Surprisingly, professional bodies,
employer o r g a n i s a t i o n s
and
unions
seem t o have
neglected systematic collection of
i n f o r m a t i o n o n r e m u n e r a t i o n i n New Z e a l a n d a n d A u s t r a l i a .
This
is
hard
to understand given t h e concerns about emigration of
a l l these groups expressed i n recent years.
I n the following paragraphs individual
s e t s of
data are
described
i n some d e t a i l .
I t s h o u l d be emphasised t h a t o n l y
d a t a which
c a n be
classified
according t o occupation a r e
surveyed.
Therefore,
data such a s those
available
from
Household Survey of Expenditure
and Income,
Income Tax a n d
Income
Statistics,
National
Accounts ( a l l
Department
of
S t a t i s t i c s ) a n d Q u a r t e r l y Employment
Survey (Department of
Labour) a r e not considered.
I t s h o u l d a l s o be m e n t i o n e d t h a t a
d e t a i l e d s u r v e y o f A u s t r a l i a n d a t a was n o t p o s s i b l e g i v e n t i m e
and
financial
constraints
but,
whenever
practical,
complementary s e r i e s t o t h o s e u s e d f o r N e w Z e a l a n d were s o u g h t .
2. 2
M i q r a t i o n Data:
Department of S t a t i s t i c s
A d e c l a r a t i o n g i v i n g p e r s o n a l d e t a i l s must be completed
by
or
f o r every passenger
l e a v i n g o r e n t e r i n g New Z e a l a n d a n d
handed t o a n i m m i g r a t i o n o f f i c e r b e f o r e g o i n g t h r o u g h Customs.
Details
from t h e s e c a r d s a r e enumerated by t h e Department o f
S t a t i s t i c s a n d some d a t a a r e p u b l i s h e d i n M o n t h l y A b s t r a c t
of
Statistics
and
Population and Miqration
Statistics.
Of
i n t e r e s t i n t h i s r e s e a r c h a r e t h e d a t a on permanent
and l o n g
term'
arrivals
and d e p a r t u r e s published
by occupational
c a t e g o r y f o r New Z e a l a n d a n d w h e r e A u s t r a l i a i s t h e c o u n t r y o f
last/next
permanent
residence.
Fairly detailed data are
p u b l i s h e d i n P o p u l a t i o n and M i s r a t i o n S t a t i s t i c s w i t h up t o 80
occupational
c a t e g o r i e s a t t h e two d i g i t l e v e l .
H o w e v e r , much
more d e t a i l e d d a t a a r e a v a i l a b l e o n a " u s e r
pays"
basis
from
the
Department.
The l o w e s t
level
of aggregation is a t t h e
t h r e e d i g i t l e v e l which g i v e s 187 o c c u p a t i o n a l c a t e g o r i e s ( p l u s
" n o t a c t i v e l y engaged" and " u n s p e c i f i e d " ) .
A t this level there
is potential f o r a thousand categories.
The d a t a c o v e r a r r i v a l s a n d d e p a r t u r e s o f p e r s o n s 1 5 t o 59
years of
age2 both s h o r t term (intended absence o r residence
l e s s t h a n t w e l v e months) and permanent and l o n g t e r m ( i n t e n d e d
a b s e n c e o r r e s i d e n c e t w e l v e months o r more) a n d i s r e c o r d e d b y
sex.
Therefore, i t is r e l a t i v e l y easy, t o o b t a i n very d e t a i l e d
d a t a on trans-Tasman m i g r a t i o n by o c c u p a t i o n .
In
many
analyses
migration
flows
are appropriately
e x p r e s s e d a s p r o p o r t i o n s o f t h e t o t a l p o p u l a t i o n i n t h e same
o c c u p a t i o n a l c a t e g o r i e s , e s p e c i a l l y when t h e p o p u l a t i o n e f f e c t s
of migration a r e being considered.
The m i g r a t i o n d a t a a r e
c l a s s i f i e d a c c o r d i n g t o t h e same s t a n d a r d a s l a b o u r f o r c e d a t a
i n t h e New Z e a l a n d c e n s u s s o ,
at
least
f o r census years,
proportions
a r e e a s y t o compute.
For non-census years, t h i n g s
are difficult
because
intercensal
estimates
of
numbers
i n
occupational categories i n the labour force a r e not possible i n
t h e a b s e n c e o f s u i t a b l y c l a s s i f i e d d a t a on e n t r y t o and e x i t
from t h e
labour
f o r c e and on unemployment.
The o n l y d a t a
a v a i l a b l e a r e from t h e Labour
Department' s q u a r t e r l y surveys
but t h e s e a r e c l a s s i f i e d by industry, not occupation.
I.
F o o t n o t e s a p p e a r o n p p 57,
58.
2. 3 Nominal and P r e v a i l i n s Weekly
Statistics
Wage
Rates:
Department
of
Data
on
nominal
and
p r e v a i l i n g w e e k l y wage r a t e s i n New
Z e a l a n d a r e c o l l e c t e d by t h e Department o f S t a t i s t i c s q u a r t e r l y
and
published
i n index form i n Monthly A b s t r a c t of S t a t i s t i c s
twenty-three
a n d Wages a n d E a r n i n q s f o r s e v e n o c c u p a t i o n a l a n d
A t i m e s e r i e s f o r n o m i n a l w e e k l y wage
industrial
categories.
recent
r a t e s e x t e n d s back t o 1909 but t h a t f o r p r e v a i l i n g i s a
innovation,
extending
b a c k t o o n l y t h e December q u a r t e r 1977.
The n o m i n a l i n d e x i s i n t e n d e d t o t r a c e c h a n g e s i n l e g a l minimum
or
award
wage
rates
and t h e p r e v a i l i n g i n d e x i s i n t e n d e d t o
t r a c e c h a n g e s i n wage r a t e s
actually
paid.
Wage
rates
are
defined t o include industry allowances o r allowances f o r length
of s e r v i c e
but
exclude
overtime
payments
or
reimbursement
allowances.
The
i n d i c e s c a n o n l y v a l i d l y be u s e d t o measure t h e d e g r e e
is measured
by
the
change
in
the
o f wages
drift,
which
( See
difference
between
nominal
and
p r e v a i l i n g wage r a t e s .
Department of S t a t i s t i c s , 1984, page 7 ) .
Owing t o i n a d e q u a c i e s
in
sampling
techniques3,
reliable
average
wage
rate
data
e x p r e s s e d i n l e v e l s c a n n o t be o b t a i n e d .
Coverage
of
the
indices
extends
to
full
time
adult
employees
( m a l e o n l y between
J u n e q u a r t e r 1929 a n d December
q u a r t e r 1 9 7 7 ) d e f i n e d i n g e n e r a l a s 20
years
or
older
whose
is between
35
and
45
hours.
Only
standard
working
week
e m p l o y e e s w h o s e minimum o r m a n d a t o r y r a t e s o f p a y a r e f i x e d b y ,
o r within t h e j u r i s d i c t i o n o f , t h e A r b i t r a t i o n Court ( i n c l u d i n g
house
agreements)
or
some
other
statutory authority
are
included.
Details
of
nominal
r a t e s a r e e x t r a c t e d by t h e Department
from r e l e v a n t awards
or
registered
agreements.
Details
of
prevailing
rates
are
collected
b y way o f p o s t a l s u r v e y o f a
sample
of
firms.
The
respondent
firms
do
their
own
classification
of
employees
according
t o
Department
of
Statistics'
job
descriptions
which
are
identified
with
a
specific
point
i n an award o r agreement.
Therefore, data a r e
particular
date
so
that
retroactive
pay
c o l l e c t e d as a t a
adjustments a r e not included.
'
Indices
are
disaggregated
into
seven major o c c u p a t i o n a l
groupings according t o the New Zealand,Standard Classification
of O c c u p a t i o n s s o t h e y c a n be c o n s i s t e n t l y r e l a t e d t o m i g r a t i o n
d a t a and census labour f o r c e data.
2. 4
Award R a t e s a n d Mean W e e k l y E a r n i n q s :
Statistics
A u s t r a l i a n Bureau of
Reasonably c l o s e
equivalents
t o
nominal
and
prevailing
w e e k l y wage i n d i c e s a t t h e a g g r e g a t e l e v e l a r e p u b l i s h e d b y t h e
A u s t r a l i a n B u r e a u o f S t a t i s t i c s i n Award R a t e s o f P a y
Indexes,
is
published
m o n t h l y a n d Weekly E a r n i n q s o f
Australia
which
Employees ( D i s t r i b u t i o n ) A u s t r a l i a which i s p u b l i s h e d a n n u a l l y .
Award
r a t e s ( - nominal) i n d i c e s a r e c o n s t r u c t e d u s i n g r a t e s of
pay s e t o u t i n award documents.
Weekly ( = p r e v a i l i n g ) e a r n i n g s
are
published
i n l e v e l r a t h e r than index form and a r e derived
f r o m a random s a m p l e s u r v e y o f d w e l l i n g s c a r r i e d o u t i n
August
each year.
U n l i k e t h e N e w Z e a l a n d d a t a f o r p r e v a i l i n g w e e k l y wage r a t e
i n d i c e s , t h e A u s t r a l i a n weekly e a r n i n g s d a t a i n c l u d e
irregular
earnings such a s overtime o r other i r r e g u l a r allowances as well
i s random,
a s regular allowances.
Although t h e s u r v e y sample
the
Australian
Bureau
of
S t a t i s t i c s n o t e s t h a t r e s p o n s e s by
o c c u p a n t s o f d w e l l i n g s a r e l i k e l y t o be s u b j e c t t o some e r r o r s ,
especially
where
irregular
allowances
are
concerned.
Also
respondents c l a s s i f y t h e i r occupations themselves.
A l l t h e d a t a i n c l u d e o n l y a d u l t e m p l o y e e s a g e d 20 y e a r s
or
older
and
are
published
f o r f u l l time employees (working 35
h o u r s o r more i n a s t a n d a r d week) a n d p a r t - t i m e e m p l o y e e s .
A t a disaggregated l e v e l comparisons
between
New
Zealand
and
Australia
are
not
possible.
I n d i c e s of award r a t e s i n
Australia
have
only
been
classified
by
occupation
since
1982
( 20
categories),
Weekly
earnings
have been
December
collected
since
August
1975 on
an
annual
basis
and
are
classified
by
occupation ( 8 categories). It is not possible
data
into
t o r e a g g r e g a t e e i t h e r t h e New Z e a l a n d o r A u s t r a l i a n
c o n s i s t e n t s e t s f o r purposes of comparison.
2. 5
Pay Research:
Pay Research Unit,
Department
of S t a t i s t i c s
The
Pay
Research Unit of t h e Department of S t a t i s t i c s has
c a r r i e d o u t a number o f d e t a i l e d s u r v e y s
of
remuneration
for
Zealand s i n c e 1979. Occupations
specific
occupations
in
New
surveyed
include
actuaries,
architects,
EDP
personnel,
cleaners,
clerks,
a c c o u n t a n t s , p h o t o g r a p h e r s and photographic
t e c h n i c i a n s and v a r i o u s t r a d e s and t r a d e s u p e r v i s o r s .
is
t o
report
on
The p u r p o s e o f t h e
Pay
Research
Unit
salaries
and wages and c o n d i t i o n s o f employment f o r p a r t i c u l a r
occupations, mainly f o r
the
purpose
of
pay
and
conditions
A l l data are confidential
negotiations
i n the State Services.
t o
survey respondents
and
those
involved
in
state
pay
negotiations.
The f o r m a t o f s u r v e y r e p o r t s d i f f e r s s l i g h t l y among s u r v e y s
b u t n o r m a l l y means, medians,
lower
and
upper
quartiles
are
computed
f o r a number o f b e n c h m a r k s i n e a c h o c c u p a t i o n by, f o r
example,
employing
authority,
qualification,
industrial
agreement
or
size
of establishment.
Notes on s a l a r y s c a l e s ,
minimum s a l a r i e s ,
bonuses,
allowances
and
conditions
of
employment
such
a s l e a v e e n t i t l e m e n t and f i n a n c i a l a s s i s t a n c e
are a l s o provided.
Normally a s u r v e y i s b a s e d on a number
of
individuals
i n
the
employment
of
the
State
Services
and
private
sector
to
give
organisations.
Sampling procedures
are
designed
statistical
estimates
of
population parameters.
Individuals
themselves a r e not surveyed but r e p r e s e n t a t i v e s
of
management
a r e p e r s o n a l l y i n t e r v i e w e d f o r t h e d e t a i l s r e q u i r e d by o f f i c e r s
of t h e Pay Research Unit.
The U n i t d o e s n o t m o n i t o r
rates
of
pay over l e n g t h y time periods.
2. 6
P o p u l a t i o n Census:
New Z e a l a n d a n d A u s t r a l i a
I n b o t h New Z e a l a n d a n d A u s t r a l i a a c e n s u s o f p o p u l a t i o n i s
carried out every f i v e years.
Income and
income
distribution
data
a r e a v a i l a b l e b y o c c u p a t i o n a l c a t e g o r i e s . However, i n c o m e
i s d e f i n e d t o i n c l u d e a l l s o u r c e s s u c h a s income
from r e g u l a r
employment, i r r e g u l a r a l l o w a n c e s , payment i n k i n d , i n t e r e s t a n d
dividends received.
For t h i s reason, t h e
data
are
not
very
helpful
in
analysing
r e w a r d s t o employment i n o c c u p a t i o n s o f
interest.
N e v e r t h e l e s s t h e l e v e l o f a g g r e g a t i o n i s low, i n t h e
Zealand extending t o 80 occupational categories.
case
of
New
2. 7
P r i v a t e S e c t o r Remuneration Data:
Hay A s s o c i a t e s
Hay A s s o c i a t e s New Z e a l a n d L i m i t e d i s o n e o f t w o m a n a g e m e n t
consultant
organisations
i n New Z e a l a n d t h a t c a r r y o u t a n n u a l
surveys of remuneration, mainly i n
white
collar
occupations.
is
p a r t o f t h e Hay G r o u p w h i c h o p e r a t e s i n 2 7
Hay A s s o c i a t e s
countries
including
New
Zealand
and
Australia.
Its
occupational
classification
is reasonably similar across a l l
t h e c o u n t r i e s i n which i t o p e r a t e s .
I n t h e Hay d a t a o c c u p a t i o n s a r e d e f i n e d
by
responsibility
content
graded
on
a
scale
f r o m 200
(equivalent
t o about
t r a d e s p e r s o n l e v e l ) t o 3600 ( e q u i v a l e n t t o managing d i r e c t o r o f
The b a s i c p r o c e d u r e i s o u t l i n e d b y
a
very large corporation).
J o b s a r e s c o r e d on t h r e e f a c t o r s , namely:
Younger ( 1 9 8 2 ) .
i)
ii)
iii)
Know-how
s k i l l s and knowledge r e q u i r e d
Accountability:
f o r a c t i o n s and consequences.
P r o b l e m - s o l v i n g : " t h e amount o f o r i g i n a l , s e l f - s t a r t i n g
t h i n k i n g r e q u i r e d by t h e job f o r a n a l y s i n g , e v a l u a t i n g ,
c r e a t i n g , r e a s o n i n g and a r r i v i n g a t d e c i s i o n s " .
S t e p s i n t h e method a r e :
i)
ii)
Collect d e t a i l e d written job descriptions.
S e l e c t a s m a l l number o f
benchmark jobs.
iii)
Evaluation committee ranks jobs according t o t h e
three
f a c t o r s , u s i n g two dimensions f o r e a c h t h a t a r e d i v i d e d
i n t o "degrees". "Guide c h a r t s " a r e used they are
a
m a t r i x on which s c o r e s c a n be p l o t t e d .
iv)
Ranked j o b s a r e a s s i g n e d a p o s i t i o n o n a s c a l e f o r e a c h
factor such that steps i n
the
scale
represent
equal
degrees of d i f f e r e n c e on t h a t f a c t o r .
Each s t e p on t h e
s c a l e i s awarded a p p r o x i m a t e l y 1 5 % more p o i n t s t h a n t h e
s t e p below
- t h i s is roughly equal t o t h e associated
income d i f f e r e n c e s .
v)
Proportions of each f a c t o r i n each job a r e gauged by t h e
evaluation committee.
vi)
A f t e r a number o f j o b s h a v e b e e n e v a l u a t e d ( s a y 40
t o
50) t h e y a r e examined f o r i n c o n s i s t e n c i e s and
adjusted
i f necessary.
vii)
A s c a t t e r diagram i s drawn showing e x i s t i n g s a l a r i e s on
v e r t i c a l a x i s and point values on h o r i z o n t a l axis.
The d a t a a r e c o l l e c t e d f r o m c l i e n t s , w e l l o v e r 1 5 0 i n
New
Zealand,
and
r e s u l t s a r e produced a s a c o n f i d e n t i a l r e p o r t t o
clients.
Data cover b a s i c remuneration and t h e t o t a l
monetary
value
of
remuneration
packages
which
includes
bonuses,
commissions and f r i n g e b e n e f i t s .
H a y d a t a h a v e b e e n c o l l e c t e d i n New Z e a l a n d s i n c e 1 9 7 4 .
To
protect
confidentiality
of
data
on a c t u a l r a t e s of pay such
d a t a a r e not presented i n t h i s Report.
2. 8 P r i v a t e S e c t o r R e m u n e r a t i o n D a t a :
PA M a n a q e m e n t
PA M a n a g e m e n t C o n s u l t a n t s c a r r i e s
out
very
comprehensive
surveys
of approximately 180 white c o l l a r occupations annually
later)
i n
a
number
of
( w i t h benchmark s u r v e y s
six
months
countries
including
New
Zealand
and
Australia.
PA
has
( PA
developed
a
detailed
manual
of
position
descriptions
1984)
which
is presented i n a similar fashion t o
Management,
Standard
Classification
of
Occupations
the
Mew Z e a l a n d
( Department
of
Statistics,
1976)
although
the
occupation
break-downs
are
quite
different.
Classifications
i n
New
Zealand
and
Australia
are
similar s o d a t a is d i r e c t l y
comparable.
Associates,
the
survey
A l t h o u g h , a s i s t h e c a s e w i t h Hay
i s n o t s t a t i s t i c a l l y r e p r e s e n t a t i v e , PA s u r v e y s a v e r y
sample
large
number
o f c l i e n t f i r m s ( o v e r 6 0 0 i n New Z e a l a n d ) .
Such
broad coverage should g i v e r e a l i s t i c i n d i c a t o r s of remuneration
in
the
private
s e c t o r f o r the occupations covered except f o r
occupations i n which t h e r e a r e v e r y few respondent firms.
I n c o n t r a s t t o Hay A s s o c i a t e s ,
r e s p o n d e n t f i r m s c l a s s i f y t h e i r own
They a r e c a u t i o n e d n o t t o be m i s l e d
c l a s s i f y positions according t o job
i n
PA
Management
surveys
employees u s i n g t h e manual.
by p o s i t i o n t i t l e s
but
to
characteristics.
Data
collected
in
s u r v e y s i n c l u d e b a s i c s a l a r y and t o t a l
cash compensation, t h e l a t t e r defined t o i n c l u d e
basic
salary
plus
monetary
v a l u e of f r i n g e b e n e f i t s , bonuses, commissions,
d i r e c t o r s f e e s , e t c wherever t h i s c a n be r e a s o n a b l y c a l c u l a t e d .
A
report, confidential t o c l i e n t s , tabulates remuneration data
according t o variables such a s geographical location, nature of
company a c t i v i t y , company a s s e t s , a n n u a l t u r n o v e r a n d number o f
broken
down
into
employees.
T o t a l cash compensation i s a l s o
i t s c a s h - e q u i v a l e n t components.
The
PA
data
appear
to
be
the
most
comprehensive
on
Zealand
or
Australia.
remuneration produced
in
either
New
However,
they
are
confined
to
mainly
professional
and
m a n a g e r i a l o c c u p a t i o n s i n t h e p r i v a t e s e c t o r s o c a n n o t be
used
i f i n t e r e s t is i n trades o r blue c o l l a r occupations.
As
PA
data
h a s b e e n c o l l e c t e d i n New Z e a l a n d s i n c e 1 9 7 8 .
w i t h t h e Hay d a t a , t o p r o t e c t c o n f i d e n t i a l i t y , d a t a
on
actual
r a t e s of p a y a r e n o t p r e s e n t e d i n t h i s R e p o r t .
CHAPTER 3
THE RATIONALE FOR FRINGE BENEFITS
3. 1
Introduction
In the
analyses
that
f o l l o w i n C h a p t e r s 5 t o 7 c a r e was
taken t o ensure t h a t , wherever possible, f r i n g e
benefits
were
considered
a s part of t o t a l remuneration.
The r e a s o n f o r t h i s
i s t h a t , from t h e n e o c l a s s i c a l economic p o i n t o f
view,
fringe
benefits
c a n be
i n t e r p r e t e d e i t h e r a s p a r t of t h e package of
p e c u n i a r y rewards a c c r u i n g t o an employee o r a s p a r t of a j o b ' s
characteristics.
For
most
employees
total
remuneration
c o n s i s t s n o t o n l y o f c a s h wages
or
salary but
also fringe
benefits
such
as
various
allowances,
motor
vehicle,
entertainment expenses, loans
at
subsidised
interest
rates,
s u b s i d i s e d house r e n t a l , o r p a i d s i c k leave.
Fringe
benefits
are
usually interpreted a s a response t o
i n c o m e t a x r e g u l a t i o n s w h i c h d i s c r i m i n a t e among d i f f e r e n t f o r m s
of
remuneration.
However,
this
is a
v e r y s i m p l i s t i c view
because,
even i f
all
forms
of
remuneration
were
treated
n e u t r a l l y f o r t a x p u r p o s e s , t h e r e might s t i l l be good economic
reason f o r t h e i r
existence.
For
example,
when
the
labour
market
i s i n d i s e q u i l i b r i u m , f r i n g e b e n e f i t s m i g h t a d j u s t more
r a p i d l y t h a n c a s h wages
or
s a l a r i e s thereby acting as an
equilibrating
mechanism.
Furthermore,
outside
strict
neoclassical
models
fringe
benefits can
also
exist
as
i n c e n t i v e s t o w a r d s X-ef f i c i e n c y .
3. 2
Employer/Employee
Preferences
The
familiar
r e a s o n advanced f o r t h e e x i s t e n c e of f r i n g e
benefits is an extension of
the
neoclassical
labour
market
model a n d t h e h e d o n i c t h e o r y o f wages, f o r e x a m p l e s e e F l e i s h e r
and Kneisner (1984, c h a p t e r 1 1 ) . Other t h i n g s being equal,
it
i s t h e t r u e c o s t of t h e t o t a l remuneration package t h a t matters
t o an employer.
This c o s t is d i f f i c u l t t o c a l c u l a t e because i t
includes
not
only t h e ( a f t e r tax)' cash cost of remuneration
but a l s o c o s t s such a s l o s t production a r i s i n g from s i c k leave
b e n e f i t s t h a t a r e widely b e l i e v e d t o have a moral hazard e f f e c t
o f i n c r e a s e d worker absenteeism.
Nevertheless,
the
tradeoff
between
c a s h wages a n d f r i n g e b e n e f i t s a t a g i v e n p r o f i t l e v e l
c a n be r e p r e s e n t e d b y a s i m p l e i s o p r o f i t
function,
Figure
1,
w h e r e t h e WR a x i s m e a s u r e s c a s h w a g e s p a i d t o e m p l o y e e s a n d t h e
FB a x i s m e a s u r e s t h e c a s h e q u i v a l e n t ( t o t h e
firm)
of
fringe
benefits
paid
t o the
employee.
The s l o p e o f t h e i s o p r o f i t
function w i l l t h e r e f o r e r e f l e c t t h e r e l a t i v e t r u e c o s t s of cash
wages and f r i n g e b e n e f i t s t o e m p l o y e r s .
FIGURE 1
An I s o p r o f i t F u n c t i o n :
From
the
C a s h Waqes a n d F r i n q e B e n e f i t s
perspective of
a n economically r a t i o n a l employee
and
this
of
course
is
determined by cash value t o t h e employee of t h e
remuneration package.
Cash
provides
more
flexibility
than
fringe
benefits
but
f r i n g e b e n e f i t s a r e o f t e n untaxed i n t h e
between
the
two
h a n d s o f t h e employee s o t h e r e is a t r a d e o f f
that
can
be
represented
by
an
i n d i f f e r e n c e map, F i g u r e 2 .
Where f r i n g e b e n e f i t s
are
not
taxed
i n
the
hands
of
the
employee
and
cash
wages are t a x e d p r o g r e s s i v e l y i n d i f f e r e n c e
curves
would
become
steeper
a t
higher
levels
of
total
remuneration.
i t is access t o r e a l goods and s e r v i c e s t h a t matters
FIGURE 2
An I n d i f f e r e n c e Map:
C a s h Waqes a n d F r i n a e B e n e f i t s
For
a
particular
employer
and
employee
the
shape
of
t h e remuneration package i s determined j o i n t l y by t h e i s o p r o f i t
f u n c t i o n a n d i n d i f f e r e n c e map s u c h t h a t t h e e m p l o y e r i s o n
the
isoprofit
f u n c t i o n and t h e employee is on t h e h i g h e s t p o s s i b l e
i n d i f f e r e n c e c u r v e , F i g u r e 3.
FIGURE 3
T h e E q u i l i b r i u m C a s h Waqes - F r i n q e B e n e f i t s C o m b i n a t i o n
3. 3
F r i n q e B e n e f i t s a s a n A d j u s t m e n t Mechanism
T u r n i n g now t o t h e e x i s t e n c e o f f r i n g e b e n e f i t s when
there
a r e no t a x a t i o n advantages, i t i s p o s s i b l e f o r f r i n g e b e n e f i t s
t o a d j u s t a d i s e q u i l i b r i u m l a b o u r m a r k e t when c a s h w a g e s
are
rigid.
Lenderink
and
Siebrand
(1976)
developed
a
d i s e q u i l i b r i u m model of t h e Dutch l a b o u r market i n which
rigid
wages a n d f l e x i b l e non-wage c o n d i t i o n s e x i s t e d .
Briefly, i f ex
a n t e l a b o u r s u p p l y e x c e e d s demand non-wage
conditions
adjust,
s h i f t i n g b o t h s u p p l y a n d d e m a n d f u n c t i o n s i n s u c h a way a s t o
r e d u c e a c t u a l unemployment.
This is i l l u s t r a t e d i n Figure
4.
Assume
that
the
c a s h wage i s Wo a n d t h a t e x a n t e d e m a n d a n d
supply curves
are
DL'
and
SL'
respectively.
Unemployment
equivalent
t o d i s t a n c e "a" would p o t e n t i a l l y e x i s t .
However,
i f non-wage c o n d i t i o n s ( f r i n g e b e n e f i t s ) a r e r e d u c e d
both
the
demand
and
supply
functions
w i l l
shift
i n the
manner
i l l u s t r a t e d and a c t u a l unemployment would o n l y be e q u i v a l e n t t o
distance
"b".
Clearly,
under
such circumstances,
fringe
b e n e f i t s might be s o u g h t by b o t h e m p l o y e r s and employees a s a n
e q u i l i b r a t i n g mechanism.
FIGURE 4
Non-Wage
Adjustment i n t h e Labour Market
person
hours
3. 4
F r i n s e B e n e f i t s and X-efficiencyb
Outside neoclassical theory another
plausible
reason f o r
the
e x i s t e n c e o f f r i n g e b e n e f i t s c a n be f o u n d .
The t h e o r y o f
X - e f f i c i e n c y d e s c r i b e d i n L e i b e n s t e i n ( 1978, 1980) assumes t h a t ,
w i t h i n a n o r g a n i s a t i o n , i n d i v i d u a l s s e e k t o m a x i m i s e t h e i r own
objectives; objectives
that
might
not
match
those
of
the
organisation.
To i l l u s t r a t e ,
employees
might s e e k a " q u i e t
l i f e " , reducing t h e i r productivity.
This increases
the
costs
of production.
An i m p o r t a n t
role
of
managers t h e r e f o r e , i s t o motivate
employees t o achieve
the
organisation' s objectives
usually
assumed
t o include high
productivity.
Managers
need
to
c o n c e i v e a j o b a s c o n s i s t i n g o f b o t h p h y s i c a l and p s y c h o l o g i c a l
characteristics
and t o manipulate t h o s e c h a r a c t e r i s t i c s (where
p o s s i b l e ) s o a s t o motivate employees i n t h e d e s i r e d d i r e c t i o n .
Leibenstein asserts
t h a t p s y c h o l o g i c a l l y s e c u r e employees a r e
more p r o d u c t i v e t h a n i n s e c u r e e m p l o y e e s .
Fringe
b e n e f i t s might
be
interpreted
a s a means
of
providing
psychological
security.
Sick leave provisions,
employer c o n t r i b u t i o n s t o s u p e r a n n u a t i o n funds,
low i n t e r e s t
home
l o a n s a n d o t h e r s i m i l a r f r i n g e b e n e f i t s may b e p e r c e i v e d
by employees a s job c h a r a c t e r i s t i c s i n d i c a t i v e o f a n employing
Such b e n e f i t s might
organisation that
c a r e s about its s t a f f .
t h e r e f o r e , have a psychic value t o employees i n e x c e s s of t h e i r
pecuniary c o s t s t o t h e employer
s o t h e y c a n be
part of
cost-effective motivation strategy.
3. 5
Conclusion
I t is c l e a r from t h i s discussion t h a t ,
i n theory,
fringe
benefits
a d d a n i m p o r t a n t e l e m e n t of f l e x i b i l i t y t o t h e l a b o u r
their
taxation advantages
market.
This is p a r t l y because of
u n d e r many t a x s y s t e m s b u t ,
even i n the
absence of t a x
advantages f o r e i t h e r employers o r employees,
fringe benefits
s t i l l e x i s t because, t h e r e a r e o t h e r economic m o t i v a t i o n s
might
f o r them.
CHAPTER 4
ANALYSIS OF MIGRATION DATA
4. 1
Level of Aqqreqation
The
level
of
aggregation
for
migration
data
in
this
r e s e a r c h was a t t h e t w o - d i g i t l e v e l o f t h e New Z e a l a n d S t a n d a r d
( NZSCO)
(Department
of
Classification
of
Occupations
19761,
giving
80 occupational categories.
I t is
Statistics,
possible
t o
go
to
higher
( 7
occupations)
or
lower
(187
occupations)
levels
of a g g r e g a t i o n but n e i t h e r i s v e r y u s e f u l
is
in
migration
propensities
among
when
the
interest
occupations
because
the
former g i v e s t o o few occupations and
t h e l a t t e r g i v e s t o o many t o b e e a s i l y c o m p r e h e n d e d .
The o c c u p a t i o n a l c a t e g o r i e s u s e d a r e
listed
i n
Table
1.
They a r e
s u f f i c i e n t l y broad t o include a l l migrants with the
obvious exceptions of those not i n t h e labour force
and
those
who
d i d not s p e c i f y a n o c c u p a t i o n on d e p a r t u r e o r e n t r y cards.
A s is i m p l i e d by t h e t i t l e o f t h i s Report, a l l
migration
data
used r e f e r o n l y t o trans-Tasman migration.
4. 2
P a t t e r n s of Misration
Patterns
of
migration
among
occupations a r e i l l u s t r a t e d i n
F i g u r e s 5, 6 and 7 where permanent and
long
term
emigration,
immigration
and n e t e m i g r a t i o n r a t e s a r e p l o t t e d f o r t h e y e a r s
e n d i n g March 1979, 1982 a n d 1 9 8 5 f o r p e r s o n s 1 5 t o 59 y e a r s
of
age.
The
data
upon which t h e f i g u r e s a r e b a s e d a r e a v a i l a b l e
from t h e author.
Time a n d f i n a n c i a l c o n s t r a i n t s p r e c l u d e d
the
use
o f d a t a f o r a g r e a t e r number o f y e a r s .
The t r i e n n i a l d a t a
was c h o s e n s o a s t o e m b r a c e t w o y e a r s i n w h i c h
the
Australian
economy
was
more
b u o y a n t t h a n t h e New Z e a l a n d e c o n o m y ( y e a r s
one
year
i n
which
the
New
e n d i n g March 1979 a n d 1982) a n d
Zealand
economy
was
more b u o y a n t t h a n t h e A u s t r a l i a n economy
(1985).
Other things being equal, it could
be
expected
that
emigration
would
be
h i g h e r i n 1979 and 1982 t h a n i n 1985 and
i m m i g r a t i o n would be l o w e r i n 1 9 7 9 a n d 1982 t h a n i n 1985.
TABLE 1
Occupation Cateqories:
Occupation
Number
N Z SCO
Miaration
Occupation
...............................................................
Physical s c i e n t i s t s
Architects, engineers
A i r c r a f t and s h i p s o f f i c e r s
Life scientists
Medical, d e n t a l , v e t e r i n a r y
S t a t i s t i c i a n s , mathematicians, systems
analysts
Economists
Accountants
Jurists
Teachers
Workers i n r e l i g i o n
Authors, j o u r n a l i s t s and r e l a t e d
writers
Sculptors, p a i n t e r s , photographers and
related creative artists
Composers and p e r f o r m i n g a r t i s t s
Athletes, sportsmen/sportswomen
P r o f e s s i o n a l , t e c h n i c a l n. e . c .
L e g i s l a t i v e o f f i c i a l s and government
administrators
Managers
Clerical supervisors
Government e x e c u t i v e o f f i c i a l s
Stenog., t y p i s t s , c a r d and tape
punching machine o p e r a t o r s
Bookkeepers, c a s h i e r s
Computing machine o p e r a t o r s
Transport and communications
supervisors
Transport conductors
Mail d i s t r i b u t i o n c l e r k s
Telephone and t e l e g r a p h o p e r a t o r s
C l e r i c a l n. e . c .
Managers ( w h o l e s a l e and r e t a i l t r a d e )
Working p r o p r i e t o r ( w h o l e s a l e and
retail trade)
S a l e s s u p e r v i s o r s and buyers
Technical salespersons, representative
and manufacturing a g e n t s
Insurance, r e a l estate, securities,
s a l e s persons and a u c t i o n e e r s
Sales persons, shop a s s i s t a n t s
S a l e s w o r k e r s n. e . c .
Managers ( c a t e r i n g and l o d g i n g
services)
Working p r o p r i e t o r s ( c a t e r i n g and
lodging services)
Table 1
(
continued)
...............................................................
38
52
39
53
40
54
41
42
43
44
55
56
57
58
45
46
48
59
60
61
62
49
50
51
63
64
70
52
53
54
71
72
55
56
57
58
59
74
75
76
77
78
60
61
62
63
64
79
80
81
82
83
65
84
66
85
67
86
68
87
69
70
71
72
73
74
75
88
89
90
91
92
93
94
47
73
Housekeeping and r e l a t e d s e r v i c e
supervisors
Cooks, w a i t e r s , w a i t r e s s e s ,
bartenders etc.
House s t a f f a n d h o u s e k e e p i n g s e r v i c e s
n. e . c .
Building c a r e t a k e r s , char workers
Launderers, d r y c l e a n e r s and p r e s s e r s
Hairdressers, barbers, beauticians e t c
P r o t e c t i v e s e r v i c e workers i n c l u d i n g
armed f o r c e s
S e r v i c e w o r k e r s n. e . c .
Farm m a n a g e r s a n d s u p e r v i s o r s
Farmers
A g r i c u l t u r e and animal husbandry
workers
Forestry workers
Fishermen, h u n t e r s
P r o d u c t i o n s u p e r v i s o r s and g e n e r a l
f o r e m e n / women
Mine/quarrymen, w e l l d r i l l e r s e t c .
Metal p r o c e s s o r s
Wood p r e p a r a t i o n w o r k e r s a n d p a p e r
makers
Chemical p r o c e s s o r s
Spinners, weavers, k n i t t e r s
Tanners, f e l l m o n g e r s and p e l t d r e s s e r s
Food a n d b e v e r a g e p r o c e s s o r s
Tobacco p r e p a r e r s and tobacco product
makers
Tailors etc., upholsterers
Shoemakers and l e a t h e r goods makers
C a b i n e t a n d r e l a t e d woodworkers
Stone c u t t e r s and c a r v e r s
Blacksmiths, toolmakers, machine t o o l
operators
Machine r e f i t t e r s , a s s e m b l e r s e t c . , n o t
electrical
Electrical f i t t e r s etc., electronic
workers
Broadcasting, sound equipment o p e r a t o r s
and cinema p r o j e c t i o n i s t s
Plumbers, welders and s h e e t metal
preparers
J e w e l l e r y and precious metal workers
Glass formers, p o t t e r s
Rubber a n d p l a s t i c s p r o d u c t makers
Paper and paperboard product makers
Printers
Painters
P r o d u c t i o n w o r k e r s n. e . c .
Table 1 (continued)
...............................................................
76
95
77
96
78
97
79
80
98
99
Bricklayers, c a r p e n t e r s and o t h e r
construction workers
S t a t i o n a r y engine and r e l a t e d equipment
operators
Material, dockers and f r e i g h t
handlers etc.
Transport equipment o p e r a t o r s
L a b o u r e r s n. e . c.
...............................................................
4. 2 . 1
Ernisration
R e f e r r i n g f i r s t t o F i g u r e 5 a number o f o b s e r v a t i o n s
made:
can
be
i)
For t h e
majority
of
occupations
the
emigration
r a t e , e x p r e s s e d a s number
per
thousand
of
the
1981
census
l a b o u r f o r c e , was l o w e s t i n 1 9 8 5 .
I n t h i s year
relatively
more
buoyant
t h e N e w Z e a l a n d e c o n o m y was
than
the
Australian
economy.
There
were
only
12
occupations
for
which
the
rate
of
emigration
per
thousand
i n
the
l a b o u r f o r c e was n o t l o w e s t i n 1 9 8 5 .
They were numbers 5, 6, 16, 25, 26, 35, 39, 53, 57, 61,
63 and
72.
(See Table 1 f o r occupations associated
with e a c h number).
ii)
Within each
year
there
was
a
large
variation
i n
e m i g r a t i o n r a t e s among o c c u p a t i o n s . O c c u p a t i o n s s h o w i n g
( s t a t i s t i c i a n s ,
relatively
high
rates
included
6
mathematicians
and
systems
analysts), 13 ( sculptors,
p a i n t e r s , photographers and r e l a t e d
artists),
and
14
( composers and performing a r t i s t s ) . Occupations showing
r e l a t i v e l y low
propensi t i e s
included
20
( government
o f f i c i a l s ) , 24 ( t r a n s p o r t a n d c o m m u n i c a t i o n s
executive
s u p e r v i s o r s ) , 46, 47, 48 ( f a r m m a n a g e r s ,
farmers
and
farm workers)
and
72
( p a p e r and paper board product
makers).
iii)
The w i t h i n y e a r p a t t e r n o f
emigration
rates
did
not
vary
significantly across
years.
This implies t h a t
emigration
tends
to
be
selective
with
respect
t o
occupation,
a
point
often
made b y d e m o g r a p h e r s ( S e e
It is interesting t o note that,
although
Shaw, 1 9 7 5 ) .
migration
appears
to
be
selective
with
respect t o
discernable
concentration of
o c c u p a t i o n , t h e r e i s no
emigration
among s k i l l e d o c c u p a t i o n s o v e r a l l .
This is
contrary t o the popular concept of the "brain drain".
FIGURE 5
4 . 2. 2
Immisration
R e f e r r i n g t o F i g u r e 6 a n u m b e r o f o b s e r v a t i o n s c a n b e made:
i)
Although i t
might
be
expected
that
the
highest
immigration r a t e
w o u l d h a v e b e e n i n 1 9 8 5 , t h i s was t h e
c a s e w i t h o n l y a f e w o c c u p a t i o n s . I n f a c t , w i t h many
o c c u p a t i o n s t h e r a t e was h i g h e s t i n 1 9 7 9 w h e n t h e
New
Zealand
e c o n o m y was
r e l a t i v e l y less buoyant than t h e
A u s t r a l i a n economy.
The p a t t e r n
of
immigration does
not
seem t o have
b e e n much a f f e c t e d b y t h e r e l a t i v e
performance o f t h e two economies.
ii)
Similar t o the case with emigration,
there
was l a r g e
variation
i n t h e i m m i g r a t i o n r a t e s among o c c u p a t i o n s .
O c c u p a t i o n s showing r e l a t i v e l y h i g h r a t e s were
numbers
11
( workers i n r e l i g i o n ) ,
14 (composers and performing
a r t i s t s ) , 15 ( a t h l e t e s , sportsmen and r e l a t e d workers),
23 ( computing machine o p e r a t o r s ) , 39 ( cooks, w a i t e r s ,
bartenders
and
related
workers)
and
52
(miners,
quarrymen,
well
drillers
and r e l a t e d
workers).
In
contrast,
occupations
with
relatively
low
rates
included
numbers
24 ( t r a n s p o r t
and
communication
s u p e r v i s o r s ) , 29 ( m a n a g e r s , w h o l e s a l e
and
trade),
54
( wood
preparation
workers
and paper
makers),
57
( tanners,
f e l l m o n g e r s and p e l t d r e s s e r s ) ,
59
( tobacco
preparation
and
product
makers)
and
72 ( p a p e r and
paperboard product makers).
iii)
The w i t h i n y e a r p a t t e r n o f
immigration r a t e s
did
not
vary
significantly
between
years
implying t h a t
i m m i g r a t i o n t e n d s t o b e s e l e c t i v e among o c c u p a t i o n s .
4. 2. 3
Net E m i g r a t i o n
Figure 7 p l o t s n e t e m i g r a t i o n r a t e s f o r t h e 80
considered.
It is clear that:
occupations
i)
Net e m i g r a t i o n r a t e s
were, f o r n e a r l y
60 o f t h e 80
o c c u p a t i o n s , lowest i n 1985, t h e y e a r i n which t h e
New
Zealand
e c o n o m y was
r e l a t i v e l y more b u o y a n t t h a n t h e
A u s t r a l i a n economy.
ii)
Net e m i g r a t i o n r a t e s b y o c c u p a t i o n were
negative
very
rarely.
For
the
three years considered almost every
o c c u p a t i o n had a n e t l o s s t o e m i g r a t i o n .
iii)
Within each year
there
was
emigration rates
although
varied l i t t l e across years.
large
variation
i n net
the
within
year pattern
FIGURE 6
Immigration by Occupation
(number per thousand of the 1981 Census labour force)
FIGURE 7
MINIMUM
MINIMUM
Net Emigration by Occupation
(number per thousand of the 1981 Census labour f o r c e )
MAXIMUM
MAXIMUM
4. 3
Implications
P r o b a b l y t h e most i m p o r t a n t a s p e c t of t h e m i g r a t i o n d a t a i s
t h a t i t shows c l e a r l y t h a t m i g r a t i o n p a t t e r n s v a r y c o n s i d e r a b l y
A study
of
why
this
is s o could
according t o occupation.
provide useful i n s i g h t s i n t o influences on labour mobility.
I n
i t might
be
possible,
for
example,
t o
an empirical study
predict
migration
propensities
using
occupation
characteristics.
I t s h o u l d be
remembered
though
that
only
three
years'
data
were
u s e d h e r e a n d a much m o r e e x h a u s t i v e
s t u d y would be r e q u i r e d t o c o n f i r m t h e s t a b i l i t y o r
otherwise
of the within year p a t t e r n s of migration.
CHAPTER 5
REMUNERATION DATA
N o m i n a l a n d P r e v a i l i n g W e e k l y Waqe R a t e s
5. 1 . 1
,
Waqes D r i f t i n New Z e a l a n d
Nominal
a n d p r e v a i l i n g w e e k l y wage r a t e s i n d i c e s p u b l i s h e d
by t h e D e p a r t m e n t o f S t a t i s t i c s c a n be
used
t o indicate
the
d e g r e e o f w a g e s d r i f t i n New Z e a l a n d .
I n Appendix F i g u r e s 1 t o
7 nominal and p r e v a i l i n g i n d i c e s a r e p l o t t e d
for
seven major
occupational classes
f o r 31 q u a r t e r s f r o m D e c e m b e r 1 9 7 7 .
The
d a t a used were p r o v i d e d b y t h e
Department
of
S t a t i s t i c s and
differ
slightly t o those
published
i n Waqes
and Earnings
b e c a u s e t h e p r e v a i l i n g i n d e x i s " f i r s t r e p o r t e d " ' t o more t r u l y
indicate actual
rates
of pay on t h e s u r v e y d a t e and h a s b e e n
s c a l e d t o r e f l e c t wages d r i f t a s i t e x i s t e d i n t h e b a s e q u a r t e r
( December 1 9 7 7 ) .
It
is c l e a r from t h e f i g u r e s t h a t t h e r e has been v i r t u a l l y
n o wages d r i f t a t a l l i n a n y o f t h e o c c u p a t i o n a l
groups since
1977 except
i n agricultural,
forestry,
f i s h i n g and hunting
workers.
The s l i g h t " b l i p s " a p p a r e n t i n t h e f i g u r e s m i g h t
be
a s much d u e
t o rounding and sampling e r r o r s a s t o any a c t u a l
events.
The e x t e n t o f w a g e s d r i f t i s s u m m a r i s e d
i n T a b l e 2.
It
is d i f f i c u l t
t o i n t e r p r e t t h e l a c k o f wages d r i f t b u t i t
m o s t l i k e l y m e a n s t h a t n o m i n a l wage a d j u s t m e n t h a s
not
lagged
much b e h i n d
t h e p r e v a i l i n g wage l e v e l , e x c e p t i n a g r i c u l t u r e .
C e r t a i n l y , some of t h e o t h e r d a t a d i s c u s s e d
i n S e c t i o n 5. 3
confirm a reasonably s t a b l e r e l a t i o n s h i p between b a s i c r a t e s of
pay and t o t a l remuneration but t h e s e
latter
concepts
do not
a p p r o x i m a t e n o m i n a l a n d p r e v a i l i n g wage r a t e s v e r y c l o s e l y .
TABLE 2
Hases D r i f t by Occupation
. . . . . . . . . . . . . . . . . . . . . . . .. .. ............................................................................
Occupation
Ratio of
Prevailing t o
Nominal 1977
( Dec)
Ratio of
Prevailing t o
Nominal 1985
( June)
Difference
%
...............................................................
Professional
e t c . ( Appendix
Fig. 1)
1. 0 0 4
Administrative
e t c . (Appendix
F i g . 2)
1.002
Clerical etc.
( Appendix
F i g . 3)
1. 025
Sales
Fig.
1. 0 4 3
(
0. 3
Appendix
4)
S e r v i c e ( Appendix
F i g . 5)
1. 0 1 4
Agricultural etc.
( Appendix
Fig. 6)
1. 077
Production etc.
( Appendix
F i g . 7)
1. 0 6 8
5. I.2
1. 007
N o m i n a l Wase R a t e I n d i c e s :
N e w Zealand and A u s t r a l i a
I n F i g u r e 8 n o m i n a l w a g e r a t e i n d i c e s f o r New Z e a l a n d a n d
Australia
a r e compared u s i n g a b a s e o f December q u a r t e r 1977.
The n o m i n a l i n d e x f o r A u s t r a l i a
was
derived
from Australian
Bureau of
S t a t i s t i c s data.
I t was n o t p o s s i b l e t o c o n s t r u c t
for
Australia the
equivalent
of
a
prevailing
index.
Furthermore,
i n the
case of
t h e n o m i n a l i n d e x , i t was o n l y
possible t o construct an aggregate index f o r a l l occupations.
The F i g u r e c l e a r l y i n d i c a t e s
that
wage
rates
under
the
jurisdiction
of
s t a t u t o r y bodies
i n New Z e a l a n d h a v e , i n
a g g r e g a t e , i n c r e a s e d much m o r e r a p i d l y t h a n
their
Australian
equivalent.
There
appears
t o be
" w a g e s d r i f t " b e t w e e n New
Zealand and A u s t r a l i a .
This is an interesting finding for,
as
m e n t i o n e d i n C h a p t e r 1 , i t m i g h t be e x p e c t e d t h a t
New Z e a l a n d
wage
rates
should
rise
i n r e l a t i o n t o A u s t r a l i a n wage r a t e s
following net
emigration of
workers
f r o m New Z e a l a n d
to
Australia.
Little
more
c a n be s a i d a b o u t t h e n a t u r e o f t h e
d r i f t , however, b e c a u s e t h e d o l l a r v a l u e s o f
wage
rates
upon
which t h e
indices
are
based
a r e not
publicly available.
T h e r e f o r e , a n y i n t e r p r e t a t i o n o f F i g u r e 8 must
be
undertaken
with great
care.
It
should
a l s o be
recognised
that
no
a d j u s t m e n t s f o r exchange r a t e s o r p u r c h a s i n g powers of
incomes
have
b e e n made
t o the
indices.
Given t h e d a t a analysed i n
S e c t i o n 5. 3 h o w e v e r , i t i s l i k e l y t h a t t h e t r u e e x t e n t o f w a g e s
drift
b e t w e e n New Z e a l a n d
and
Australia
is exaggerated by
Figure 8.
5. 2
Remuneration Data:
Hay A s s o c i a t e s
5. 2. 1
T h e I m p o r t a n c e o f F r i n q e B e n e f i t s i n New Z e a l a n d
T h e i m p o r t a n c e o f f r i n g e b e n e f i t s i n New Z e a l a n d
i n the
1 9 8 0 ' s c a n be s e e n f r o m T a b l e 3.
The T a b l e p r e s e n t s r a t i o s o f
t o t a l remuneration t o basic
remuneration,
total
remuneration
defined
t o i n c l u d e v a l u e s of f r i n g e b e n e f i t s such a s bonuses,
commissions,
expense allowances,
etc.
A
comparison
with
A u s t r a l i a was
not
made
because a complete s e t of comparable
Australian data
was
not
available.
In the
Table eleven
occupation codes a r e presented.
For reasons of c o n f i d e n t i a l i t y
t h e codes a r e not e x p l i c i t l y defined here.
As
an approximate
g u i de,
c o d e 200
refers
t o job
content
equivalent
to a
t r a d e s p e r s o n and code 3000 r e f e r s t o job c o n t e n t o f a
managing
director
of
a
large corporation.
The h i g h e r t h e c o d e n u m b e r
t h e "higher" the job content.
I n t h e c a s e s of l o w e r
code occupations
( c o d e s 200,
300,
400) f r i n g e b e n e f i t s h a v e n o t formed a v e r y l a r g e p a r t o f t o t a l
remuneration
packages.
However,
i n
the
higher
code
occupations,
fringe
benefits
have
c l e a r l y been an important
element i n t o t a l remuneration.
G e n e r a l 1y t h e
proportion of
f r i n g e b e n e f i t s has c r e p t upwards d u r i n g t h e 1 9 8 0 ' s and i n 1985
t h e r a t i o o f t o t a l t o b a s i c r e m u n e r a t i o n was a r o u n d 1 . 2 f o r t h e
higher level occupations.
5. 2. 2
G r o w t h o f T o t a l R e m u n e r a t i o n i n New Z e a l a n d
The g r o w t h o f t o t a l r e m u n e r a t i o n a c r o s s t h e t e n o c c u p a t i o n
codes is i l l u s t r a t e d by i n d i c e s of t o t a l remuneration s e t out
i n T a b l e 4.
The b a s e i s March 1 9 7 9 = 1 0 0 0 .
I t is c l e a r from
t h e t a b l e t h a t r a t e s of growth i n
total
remuneration varied
s i g n i f i c a n t l y among o c c u p a t i o n s .
By M a r c h 1 9 8 5 , t h e d i f f e r e n c e
i n i n d e x b e t w e e n c o d e 6 0 0 a n d c o d e 2 5 0 0 was 2 2 5 i n d i c a t i n g t h a t
their
rates
of change had been q u i t e d i f f e r e n t d u r i n g t h e s i x
years
considered,
on average
about
13
and
11
percent
1
W
w
b
um
c ,+
H W
1
s
0
0
m
0
0
=
0
0
0
0
v
0
0
,
0
0
2
0
0
z
0
0
0
0
r
"d
0
0
5
c o m p o u n d i n g p e r annum r e s p e c t i v e l y .
Although t h e s e averages
might
n o t seem d i v e r g e n t a t f i r s t s i g h t , i t must be remembered
t h a t t h e i r compounded d i f f e r e n c e s become s u b s t a n t i a l o v e r t i m e .
The
pattern
that
emerged
was t h a t
lower l e v e l codes
c o n s i s t e n t l y showed l a r g e r i n c r e a s e s t h a n h i g h e r l e v e l c o d e s
( a r o u n d 70 - 75 p e r c e n t o v e r t h e f i v e y e a r s compared w i t h 65 t o
70 p e r c e n t ) .
The i n d i c e s i n T a b l e 4 a r e i n t e r e s t i n g f o r t h e f a c t
that
t h e y show t h a t l a b o u r m a r k e t s m i g h t n o t be a s i n f l e x i b l e a s i s
often believed.
Certainly, i n a given year
increases i n the
i n d i c e s d o not d i f f e r g r e a t l y , but t h e compounding e f f e c t s of
such d i f f e r e n c e s imply t h a t ,
over time,
total
remuneration
among o c c u p a t i o n s c o u l d d r i f t w i d e l y a p a r t .
T h i s c a n o n l y be a
t o the
t e n t a t i v e conclusion a t t h i s s t a g e but i t does point
v a l u e of
developing and a n a l y s i n g a l a r g e r
d a t a base t o
d i s c o v e r j u s t how r i g i d t o t a l r e m u n e r a t i o n r e l a t i v i t i e s among
A q u e s t i o n of i n t e r e s t i s whether o r
occupations actually are.
n o t l a r g e compounded d i f f e r e n c e s would e x i s t f o r
l o n g i n New
Z ealand.
5. 3
Remuneration Data:
5. 3 . 1
C l a s s i f i c a t i o n of Occupations
PA M a n a s e m e n t C o n s u l t a n t s
PA
Management
C o n s u l t a n t s h a s a v e r y c o m p r e h e n s i v e manual
of occupation descriptions.
I n a l l PA i d e n t i f y o v e r 2 8 0
positions
but,
because
d a t a on e v e r y o c c u p a t i o n i s n o t
c o l l e c t e d e v e r y y e a r , o n l y 93 a r e a v a i l a b l e f o r
use
i n the
present
analysis.
They a r e l i s t e d i n T a b l e 5 and a r e
i d e n t i f i e d b y a number i n t h e T a b l e s a n d F i g u r e s
that
follow.
The o c c u p a t i o n s
i n Table 5 a r e confined t o w h i t e c o l l a r
o c c u p a t i o n s s o t h e y c o u l d n o t be c o n s t r u e d t o c o v e r
t h e whole
labour market.
TABLE 3
R a t i o o f T o t a l R e m u n e r a t i o n t o B a s i c R e m u n e r a t i o n - New Z e a l a n d
. . . . . . . . . . . . . ................................................................. . . . . . . . . . . . . . . . . . .
Code
1979
1980
1981
1982
1983
1984
1985
200
300
400
600
800
1000
1200
1500
2000
2500
3000
I.0 7
1.01
1. 1 5
1. 1 5
1. 1 8
1. 1 9
1.20
1.21
1. 1 6
1. 1 8
1. 17
I.0 3
1. 0 9
1. 1 4
1. 1 8
1. 1 8
1.20
1.21
1.21
1.22
1.20
1. 23
I.0 4
1. 0 9
1. 1 4
1. 1 6
1. 1 7
1. 1 7
1. 1 8
1. 1 9
1. 1 7
1.21
1. 1 3
1.02
1. 08
1. 1 3
1. 1 7
1. 1 7
1. 1 9
1. 1 8
1. 1 7
1. 1 6
I.2 1
1. 1 5
I.0 5
1.10
1. 1 4
1, 1 6
1. 1 7
1. 1 8
1. 1 9
1. 1 8
1. 23
1. 23
1.20
I.0 4
1.10
1. 13
1. 16
1. 1 9
1.20
1.20
1. 1 9
1.21
1. 23
1.20
I.0 4
1.12
1. 1 3
1. 1 9
1-21
1-22
1.21
1. 23
1. 24
1.20
1. 1 9
...............................................................
_
. ._
. ._. ._. ._. -. _
. .-. _
. ._
. ._. ._. -. .-.-.-._
. ._. ._. -. .-.-.-.-. -. .- .-.-.-.-. -. .- .-.-.-.-. -. .-.-.-.-.-. -. .-.-.-.-. - - - - - - - - - - - - - - - Notes:
1.
Code r e f e r s t o o c c u p a t i o n l e v e l .
200 i s t r a d e s l e v e l ;
i s managing d i r e c t o r ( l a r g e c o r p o r a t i o n ) l e v e l .
2.
Column h e a d i n g s r e f e r t o March o f e a c h y e a r .
3000
TABLE 4
- New Z e a l a n d
.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................................
I n d i c e s of T o t a l Remuneration
,
Code
1980
1981
1982
1983
1984
1985
200
300
400
600
800
1000
1200
1500
2000
2500
3000
1170
1158
1173
1204
1174
1180
1173
1151
1192
1144
1137
1393
1385
1394
1402
1366
1353
1355
1343
1359
1377
1241
1615
1637
1650
1680
1645
1644
1602
1569
1570
1608
1523
1776
1788
1803
1780
1719
1731
1703
1660
1755
1739
1669
1770
1822
1804
1838
1793
1788
1729
1684
1782
1717
1693
2001
2055
2047
2098
2062
2024
1954
1880
201 5
1873
1894
...............................................................
. . . . . . . . . . . . . . . ........................................................................... . . . . . . . . . . .
1.
2.
3.
Code a s i n T a b l e 3.
Column h e a d i n g s r e f e r t o i n d e x o f t o t a l r e m u n e r a t i o n a s
March o f e a c h y e a r .
Base: March 1 9 7 9 = 1 0 0 0
at
5. 3 . 2
Differences
New Z e a l a n d
i n
Remuneration
between
Australia
and
I n Tables 6 and 7 d i f f e r e n c e s i n remuneration
between
Australia
a n d New Z e a l a n d
a r e measured
using ratios
of
A u s t r a l i a : New Z e a l a n d .
I n order
t o ensure
comparability
between
t h e t w o c o u n t r i e s a l l A u s t r a l i a n r e m u n e r a t i o n d a t a was
and exchange
rates
a d j u s t e d f o r New Z e a l a n d p u r c h a s i n g p o w e r
using the
p u r c h a s i n g power p a r i t y f a c t o r s i n B r o s n a n and P o o t
( 1985)
appropriately transformed.
Purchasing
power
parity
factors
a r e weights applied
t o Australian remuneration data
that take
i n t o account
the
Australian/New Zealand
foreign
exchange r a t e
and t h e
d i f f e r e n c e s i n consumer c o s t s i n e a c h
country. For a d e t a i l e d d i s c u s s i o n of
the
purchasing
power
p a r i t y c o n c e p t s e e OECD ( 1 9 8 2 ) .
R a t i o s o f m e d i a n 9 r e m u n e r a t i o n a r e s e t o u t i n T a b l e 6.
For
b o t h b a s i c remuneration and t o t a l c a s h compensation ( d e f i n e d t o
i n c l u d e c a s h v a l u e s of f r i n g e b e n e f i t s ) r a t i o s were g e n e r a l l y
g r e a t e r than unity implying
higher
p u r c h a s i n g power
parity
i n c o m e s i n A u s t r a l i a t h a n i n New Z e a l a n d .
A number
o f o t h e r o b s e r v a t i o n s c a n b e made:
i)
Ratios f e l l s t e a d i l y over
the
period
almost a l l cases.
This confirms the
o b s e r v a t i o n i n F i g u r e 8.
ii)
Ratios
were
generally
higher
for
compensation than b a s i c remuneration.
iii)
iv)
considered i n
"wages
drift"
total
T h e r e was w i d e v a r i a t i o n o f r a t i o s among o c c u p a t i o n s .
There
are
some o c c u p a t i o n s f o r w h i c h
ratios
were
significantly l e s s than unity.
I n 1985 t h e s e i n c l u d e d
codes 2 ( c h i e f executives), 18 ( s a l e s engineers),
28
( market
r e s e a r c h o f f i c e r s ) , 30, 32 ( some a c c o u n t a n t s ) ,
81 ( s o m e e n g i n e e r s ) . I t w o u l d b e u n w i s e t o a t t a c h t o o
much
importance t o t h e s e observations because the d a t a
a r e n o t b a s e d on a s t a t i s t i c a l l y random sample.
TABLE 5
Occupation Cateqories
Occupation
Number
-
Occupation
PA D a t a
...............................................................
1
2
3
4
5
6
7
cash
Chief executive A
Chief executive B
Assistant chief executive
D i v i s i o n a l g e n e r a l manager
Senior executive - finance
Senior executive - personnel
Senior executive - supply
Table 5 ( c o n t i n u e d )
...............................................................
Occupation
Number
Occupation
...............................................................
8
S e n i o r e x e c u t i v e - operations/manufacturing
9
10
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
Senior executive - engineering
Senior executive - secretary/admin.
S e n i o r e x e c u t i v e - r e s e a r c h and development
N a t i o n a l s a l e s manager
Branch s a l e s manager
R e g i o n a l / a r e a s a l e s manager
Sales supervisor
S a l e s m a n a g e r ( s a l e s b u d g e t > $ 2 m p. a .
Sales engineer
Senior sales representative
G e n e r a l s a l e s r e p r e s e n t a t i v e , o v e r 30 y e a r s
T e c h n i c a l s a l e s r e p r e s e n t a t i v e , under 30 y e a r s
Medical d e t a i l e r
M a r k e t i n g manager
P r o d u c t manager - s a l e s
P r o d u c t manager - m a r k e t i n g
A d v e r t i s i n g manager
Marketing s e r v i c e s manager
Market r e s e a r c h o f f i c e r
Chief accountant
Divisional/ branch accountant
Financial accountant
Assistant accountant
Accountant - newly g r a d u a t e d
Cost accountant
Management a c c o u n t a n t
C r e d i t manager
O f f i c e manager
Data p r o c e s s i n g manager
Senior systems analyst
Systems a n a l y s t
S e n i o r programmer
Computer programmer
Computer o p e r a t i o n s manager
Data c o n t r o l s u p e r v i s o r
Data c o n t r o l o p e r a t o r
S e n i o r EDP m a c h i n e o p e r a t o r
EDP m a c h i n e o p e r a t o r
Key p u n c h s u p e r v i s o r
Key p u n c h o p e r a t o r
P e r s o n n e l manager
Personnel o f f i c e r
Industrial relations officer
T r a i n i n g manager
Training officer
P u r c h a s i n g manager
Senior purchasing o f f i c e r
Purchasing o f f i c e r
Warehouse and d i s t r i b u t i o n manager
Table 5 (continued)
...............................................................
Occupation
Number
Occupation
...............................................................
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
P a c k e r - o v e r 21 y e a r s
Warehouse s u p e r v i s o r - up t o 1 0 s t a f f
Works m a n a g e r - u p t o 5 0 s t a f f
Work s t u d y m a n a g e r
Work s t u d y o f f i c e r
P r o d u c t i o n manager
P r o d u c t i o n s u p e r i n t e n d e n t - l e s s t h a n 50 s t a f f
P r o d u c t i o n s u p e r i n t e n d e n t - more t h a n 50 s t a f f
P r o d u c t i o n s u p e r v i s o r - l e s s t h a n 25 s t a f f
P r o d u c t i o n s u p e r v i s o r - more t h a n 25 s t a f f
Trades supervisor
Quality control officer
P r o d u c t i o n p l a n n i n g manager
Senior production planner
Production planner
Chief draughtperson
Design draught person
Senior professional engineer
Professional engineer - level 4
Professional engineer - level 3
Professional engineer - level 2
Professional engineer - level 1
Engineer - not q u a l i f i e d
Audio t y p i s t
Private secretary t o chief executive
Confidential secretary
Junior shorthand t y p i s t
General c l e r k - l e v e l 3
General c l e r k - l e v e l 2
Telephone o p e r a t o r
Scientist/chemist - level 4
Scientist/chemist - level 3
Scientist/chemist - level 2
Scientist/chemist - level 1
Laboratory assistant/attendant
...............................................................
Ratios of i n t e r q u a r t i l e ranges a r e
set
out
i n Table
7.
There were no s i g n i f i c a n t g e n e r a l t r e n d s i n t h e r a t i o s o f b a s i c
remuneration
but
in
total
cash
compensation
there
was
a
downward
trend.
T h e r e was a l s o a l a r g e n u m b e r o f o c c u p a t i o n s
especially
i n
the
f o r which t h e r a t i o s were l e s s t h a n u n i t y ,
total
cash
compensation groups.
In
1985 t h i s
was
quite
pronounced f o r t h e n n e a r l y h a l f t h e occupations
showed
ratios
less than unity.
This
means t h a t t h e r a n g e o f r e m u n e r a t i o n
was
smaller
r e p o r t e d i n New Z e a l a n d w a s a s o f t e n l a r g e r a s i t
than
for
Australia
but t h i s r e s u l t could have a r i s e n because
t h e l a b o u r f o r c e i n many o c c u p a t i o n s i s r e l a t i v e l y s m a l l i n New
Zealand
compared
with
Australia
and
the
samples
are
not
s t a t i s t i c a l l y random.
I t i s d i f f i c u l t by i n s p e c t i n g t h e r a t i o s i n T a b l e s 6 and
7
to
elicit
much
information
o n how r e m u n e r a t i o n a m o n g
o c c u p a t i o n s h a s changed but i t does seem t h a t t h e
within
year
p a t t e r n s have not a l t e r e d s i g n i f i c a n t l y between years.
This is
d i s c u s s e d i n more d e t a i l below.
TABLE 6
R a t i o o f Median Compensation Between A u s t r a l i a
and New Zealand
...............................................................
Basic
Occupation
Number
T o t a l Cash
Compensation
1979
1982
1985
1979
1982
1985
1.4
1.1
1. 8
1.9
1.7
1. 6
1.7
1.7
1.5
1.5
1.5
1. 6
1.7
1. 8
1. 6
1. 6
1.3
1.5
1. 6
1.5
I.8
1. 6
1.7
1.7
1.7
1.7
1. 6
1. 6
1.5
1.4
1.5
1. 6
1.5
1. 6
1.5
1.7
1.6
1.6
1.0
0. 9
1.4
I.5
1.1
1.2
1.2
1.2
1.0
1.2
1.3
1.2
1.3
1.5
1.2
1.2
0. 9
1.2
1.2
1.2
1.2
1.3
1.2
1.2
1.3
I.3
1.3
1.1
1.2
1.2
1.1
1.2
1.1
1.1
1.1
1.2
1.2
1.1
I.0
0. 8
1.2
1.2
1.1
1.2
1.2
1.1
1.1
1.1
1.2
1.3
1.2
1.4
1.5
0. 9
1.2
0. 8
1.1
1.0
1.2
1.1
1. 8
1.0
1.2
1.1
1.4
0. 9
1. 6
0. 9
1.0
0. 8
1.0
1.2
1.1
I.2
1.2
1.1
1.5
1.0
1.7
2. 1
1.7
1.7
1. 8
1. 8
1. 6
1.5
1. 6
1. 6
1.7
1.9
1.6
1. 6
1.5
1. 8
1. 6
1.5
1.7
1.7
1.7
1.7
1. 8
1.9
1. 6
1.7
1. 6
1.4
1.6
1.7
1. 6
1.7
1. 6
1.7
1.6
1.7
0. 9
0. 8
1.3
1.4
1.1
1.1
1.7
1.2
1.0
1.3
1.2
1.1
1.2
1.4
1.2
1.1
0. 9
1.2
1.1
1.1
1.2
1.2
1.2
1.1
1.3
1.2
1.2
1.0
1.2
1.1
1.0
1.2
1.1
1.1
1.1
1.1
1.1
1.1
1.1
0. 8
1.0
1.1
1.1
1.2
1.2
1.1
1.1
1.0
1.0
1.2
1.2
1.3
1.7
1.0
1.1
0. 9
1.2
1.0
1.2
1.1
1. 6
1.0
1.2
1.0
1.3
0. 7
1.9
0. 8
1.0
0. 7
0. 9
1.0
1.1
1.2
1.1
1.1
...............................................................
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
Table 6 (continued)
Occupation
Number
Basic
1979
1982
T o t a l Cash
compensation
1985
1979
1982
1985
Table 6 (continued)
...............................................................
Basic
Occupation
Number
T o t a l Cash
compensation
1979
1982
1985
1979
1982
1985
1.5
1.5
1.7
1. 8
1. 8
1.3
1.2
1.1
1.2
1.4
1.1
1.1
1.1
1.0
1.3
I .6
1. 6
1.7
1.9
1.9
1.2
1.1
1.0
1.1
1.4
1.0
1.0
1.1
1.0
1.3
...............................................................
89
90
91
92
93
.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..............
Note:
See Table 5 f o r
numbers.
occupations
identified
by
occupation
Table 7
R a t i o of I n t e r q u a r t i l e R a n q e s o f C o m p e n s a t i o n
B e t w e e n A u s t r a l i a a n d New Z e a l a n d
.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..
Basic
Occupation
Number
1979
1982
T o t a l Cash
compensation
1985
1979
1982
1985
Table 7 ( c o n t i n u e d )
Occupation
Number
Basic
1979
1982
T o t a l Cash
Compensation
1985
1979
1982
1985
Table 7 (continued)
_____--_____--_____-------------------------------------------Basic
Occupation
Number
T o t a l Cash
Compensation
1979
1982
1985
1979
1982
1985
0. 6
0. 3
0. 9
0. 7
0. 9
1.7
1.4
1.0
1.1
0. 6
0. 8
1.2
0. 6
2. 7
1.4
0. 8
0. 8
0. 9
0. 6
0.1
0. 5
1.9
0. 7
0. 3
1.3
0. 7
0. 7
0. 8
0. 7
0. 6
0. 6
0. 7
1.5
0. I
0. 5
0. 1
0. 5
1.0
1.0
0. 4
0. 9
0. 5
0. 7
0. 6
0. 3
0. 7
1.3
1. 6
1.5
0. 7
1.4
1.1
0. 7
1.2
1.3
0. 4
1.0
0. 7
1.2
1.0
0. 8
2. 7
1.3
0. 9
0. 7
0. 6
0. 4
0.1
0. 5
I.0
0. 8
0. 3
1.1
0. 8
0. 6
0. 7
0. 7
0. 4
0. 7
0. 5
1.2
0. I
0. 4
0.1
0. 3
0. 7
0. 8
0. 6
0. 8
0. 4
0. 8
0. 9
0. 4
0. 5
0. 9
1.1
_______________-----------------------------------------------78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
- _____
-_
- -_-------------------------------------------------------------------------------------- _____
__
__
-_
__
__
__
__
_-_-_
Note:
5. 3. 3
See Table 5
numbers.
for
occupations
identified
by
occupation
F r i n q e B e n e f i t s i n New Z e a l a n d a n d A u s t r a l i a
I n F i g u r e s 9 and 10 t h e r a t i o of t o t a l c a s h compensation t o
each
occupation
in
the
basic remuneration is traced out f o r
Data f o r t h e f i g u r e s
years
ending
March 1979, 1982 a n d 1985.
a r e a v a i l a b l e from the author.
F o r New Z e a l a n d t h e f o l l o w i n g o b s e r v a t i o n s c a n b e made
i)
R a t i o s t e n d e d t o be h i g h e s t f o r t h e s a l e s p o s i t i o n s a n d
more
senior
managerial
positions.
This confirms t h e
r e s u l t s o f t h e Hay d a t a d i s c u s s e d i n S e c t i o n 5. 2.
ii)
D i s t r i b u t i o n of
ratios
a c r o s s o c c u p a t i o n s and
within
y e a r s was q u i t e
uneven a c r o s s o c c u p a t i o n s but remained
f a i r l y steady across years.
iii)
I n g e n e r a l , r a t i o s were h i g h e r i n t h e y e a r e n d i n g March
1985
t h a n 1982 o r 1979.
This confirms the trend noted
i n t h e Hay d a t a i n C h a p t e r 6.
I n Figure 10 f o r Australia, i t is c l e a r
that
ratios
were
generally
higher
f o r t h e more s e n i o r m a n a g e r i a l p o s i t i o n s a n d
uneven.
In
t h a t w i t h i n - y e a r d i s t r i b u t i o n o f r a t i o s was q u i t e
t h e s e t w o r e s p e c t s t h e New Z e a l a n d a n d A u s t r a l i a n p a t t e r n s were
similar.
I n c o n t r a s t t o New Z e a l a n d h o w e v e r ,
the
within-year
p a t t e r n v a r i e s between y e a r s q u i t e markedly.
T h i s c o u l d be t h e
result
of
a d i f f e r e n t economic environment i n A u s t r a l i a ( f o r
e x a m p l e , t h e A u s t r a l i a n economy was n o t s u b j e c t e d t o a s s t r i c t
a n i n c o m e s p o l i c y a s was New Z e a l a n d d u r i n g 1 9 8 2 t o 1 9 8 4 ) o r i t
may i n d i c a t e m o r e f l e x i b i l i t y i n t h e
s e t t i n g of
remuneration
packages i n Australia.
A thorough examination of d a t a annually
f r o m 1 9 7 8 ( when t h e PA d a t a c o m m e n c e ) w i t h a d e t a i l e d
analysis
of
the
economic
environment
i n each country i n those years
c o u l d p r o v i d e some u s e f u l i n s i g h t s
into this
question.
The
data presented
i n F i g u r e 9 and 1 0 a l o n e c a n n o t overcome t h i s
i d e n t i f i c a t i o n problem.
FIGURE 9
Ratio of Total Cash Compensation t o Basic
Remuneration - New Zealand
5 . 3. 4
Relative Chanses i n
T o t a l Cash
Zealand
and A u s t r a l i a
Compensation
i n
New
The f i n a l a n a l y s i s c h o s e n f o r t h e PA d a t a
was
t o
compare
relative
changes
i n t o t a l c a s h compensation between t h e y e a r s
e n d i n g March 1 9 8 2 a n d 1 9 8 5 .
Relative changes
are
represented
as
r a t i o s i n F i g u r e s 11 and 12.
Data used f o r t h e f i g u r e s a r e
a v a i l a b l e from t h e author.
I n t h e c a s e o f New Z e a l a n d c h a n g e s v a r y q u i t e
considerably
among o c c u p a t i o n s , c o n f i r m i n g t h e r e s u l t
f o u n d i n t h e Hay d a t a
Indeed, i n a
few cases
total
cash
r e p o r t e d i n S e c t i o n 5. 2 .
compensation
appeared t o f a l l although, a s emphasised e a r l i e r ,
t h e samples were n o t
statistically
random
so data
must
be
interpreted cautiously.
i n t o t a l c a s h c o m p e n s a t i o n were
In
general,
increases
greater
between 1979 and 1982 t h a n between
1982 and
1985 a
r e f l e c t i o n , no d o u b t , o f t h e p r i c e s a n d wages f r e e z e .
Turning t o Figure 12 f o r Australia i t is c l e a r t h a t changes
Zealand.
h a v e v a r i e d more w i d e l y b e t w e e n
years
than
in
New
This
implies
that
there
could
be
more
flexibility i n the
Zealand
labour
market,
A u s t r a l i a n labour market than t h e New
although as
pointed
out
earlier,
careful
analysis
of t h e
economic e n v i r o n m e n t i n A u s t r a l i a would be n e c e s s a r y t o e n s u r e
correct identification of such f l e x i b i l i t y .
FIGURE 11
-
a t i v e Chanqes i n T o t a l Cash Compensation
Minimum
0.7
New Zealand
Maxi mum
1.9
+------------------------------------------.---------------------------------------------+
I----------
--
*-
198211979
198511982
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t'
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.7
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1.9
Max
FIGUKE 12
R e l a t i v e Changes
Minimum
-
Australia
Maximum
CHAPTER 6
A N ESTIMABLE MIGRATION MODEL
6. 1
Backqround
This
chapter
reports
tests
of
the
hypotheses
that
d i f f e r e n c e s i n remuneration motivate emigration and t h a t r e t u r n
migration motivates immigration.
These hypotheses a r e o u t l i n e d
below.
Migrants
were
classified
according
t o
twenty-one
o c c u p a t i o n s f o r t h e y e a r s e n d i n g March
1979,
1982 and
1985.
These y e a r s were c h o s e n b e c a u s e d i s a g g r e g a t e d d a t a o n m i g r a t i o n
was r e a d i l y a v a i l a b l e b u t h a p p i l y t h e y i n c l u d e t w o y e a r s when
the
Australian
economy
w a s m o r e b u o y a n t t h a n t h e New Z e a l a n d
( 1 9 7 9 a n d 1 9 8 2 ) a n d o n e y e a r when t h e New Z e a l a n d
e c o n o m y was
(1985).
There
was
net
more
buoyant
than
the
Australian
7409
persons
e m i g r a t i o n from N e w Zealand o f 19396, 14423 and
aged
15 t o
59
years
on
a
permanent
and
long term basis
r e s p e c t i v e l y i n 1979, 1982 and 1985.
Results of the study support the
hypotheses
noted
above,
although
they should
be
interpreted
c a u t i o u s l y because t h e
model i s n a i v e a n d t h e number o f o b s e r v a t i o n s i s r e s t r i c t e d .
I n e c o n o m i c m o d e l s of e m i g r a t i o n
i t is n o r m a l l y assumed
that
a
d e c i s i o n t o m i g r a t e o r s t a y p u t i s made o n t h e g r o u n d s
o f c o s t - b e n e f i t a n a l y s i s , however i n f o r m a l t h a t a n a l y s i s
might
Assume t h a t m i g r a t i o n i s a r e s p o n s e t o
be,
see
Shaw ( 1 9 7 5 ) .
expected earnings s o t h a t p o t e n t i a l migrants i n an occupational
c l a s s c o n s i d e r l a b o u r m a r k e t s i n b o t h A u s t r a l i a a n d New Z e a l a n d
and choose t h e o p p o r t u n i t y t h a t maximizes t h e i r e x p e c t e d
after
tax
gains.
I n t h e s p i r i t o f T o d a r o ( 1 9 7 6 ) a n d A r o r a a n d Brown
( 19711 ,
a p o t e n t i a l m i g r a n t ' s e x p e c t e d g a i n s c o u l d be
measured
by d i f f e r e n c e s
i n a f t e r t a x p u r c h a s i n g power p a r i t y incomesi
time
and t h e p r o b a b i l i t y o f o b t a i n i n g a job o v e r t h e m i g r a n t ' s
horizon.
The
basic
e l e m e n t s o f t h e model a r e a s f o l l o w s .
L e t V(0)
be t h e d i s c o u n t e d p r e s e n t v a l u e o f e x p e c t e d n e t income o v e r t h e
Y.
and
YZ a f t e r t a x
potential
migrant's
time
horizon;
p u r c h a s i n g power p a r i t y i n c o m e s i n
the
relevant
occupational
class
i n
A u s t r a l i a a n d New Z e a l a n d r e s p e c t i v e l y ; n t h e n u m b e r
r
of time p e r i o d s i n t h e p o t e n t i a l m i g r a n t ' s time horizon; and
t h e m i g r a n t ' s r a t e o f time p r e f e r e n c e .
The d e c i s i o n t o m i g r a t e
w i l l depend o n w h e t h e r V(0) i s p o s i t i v e ( m i g r a t e )
or
negative
( s t a y put).
Now:
where P
=
probability that
the
migrant
w i l l
have
found
employment i n A u s t r a l i a / N e w Z e a l a n d i n
time
period
t;
CO = c o s t s o f m i g r a t i o n ;
t
=
and
time period.
i s s e e n a s a n income
Therefore,
the
potential
migrant
u t i l i t y ) maximizer o v e r time and space as, f o r
example,
in
M u e l l e r ( 1 9 8 2 , C h a p t e r 1 ) a n d Willis ( 1 9 7 4 , C h a p t e r 2 ) .
(=:
I n m o s t e m p i r i c a l a p p l i c a t i o n s V( 0) c a n n o t b e e s t i m a t e d b u t
t h e p r i n c i p l e c a n be
embodied
i n a
regression
e q u a t i o n by
i n c l u d i n g a s r e g r e s s o r s i n d i c a t o r s o f income a n d unemployment
d i f f e r e n t i a l s s o t h a t a n e s t i m a b l e model might t a k e t h e form:
Mi
= M( D i ,
Ui)
where M = e m i g r a n t s i n a n o c c u p a t i o n a l
class
expressed
as a
proportion
of
the
labour force i n the occupational
c l a s s i n New Z e a l a n d ;
D = difference
i n after
t a x purchasing
power
parity
incomes between
Australia
a n d New Z e a l a n d f o r t h e
o c c u p a t i o n a l c l a s s ; and
U = difference i n
unemployment
rates
between A u s t r a l i a
a n d New Z e a l a n d i n t h e o c c u p a t i o n a l c l a s s .
6. 2
Data
It
was m e n t i o n e d a b o v e t h a t r e c e n t e m p i r i c a l e s t i m a t i o n o f
migration functions
for
New Z e a l a n d
has
relied
on h i g h l y
aggregated t i m e s e r i e s data.
A l t h o u g h most t h e o r e t i c a l models
of m i g r a t i o n i n t h e economic l i t e r a t u r e a r e microeconomic
in
concept
( s e e Shaw,
1975) i t is not s u r p r i s i n g t h a t empirical
m o d e l s i n New Z e a l a n d h a v e n o t u s e d m i c r o e c o n o m i c d a t a b e c a u s e
it is very d i f f i c u l t t o find. " I n the present study the best
t h a t c o u l d be
done
was
t o gather
d a t a on m i g r a t i o n and
trans-Tasman
before
t a x incomes
f o r twenty-one occupational
c l a s s e s i n t h r e e y e a r s ( e n d i n g March 1 9 7 9 , 1 9 8 2 a n d
1985)
and
e s t i m a t e a n a i v e e c o n o m e t r i c model.
Data on permanent and l o n g t e r m m i g r a t i o n o f 15 t o 59 y e a r
old
persons
by
minor
( up
t o three
digit)
occupational
classifications
were
available
from
the
Department
of
Statistics.
Data
on b e f o r e
t a x remuneration
packages
i n
A u s t r a l i a a n d New Z e a l a n d w e r e made a v a i l a b l e b y PA M a n a g e m e n t
Consultants.
They c o n s i s t e d o f
mean,
median
and q u a r t i l e
salaries,
both basic and including f r i n g e benefits, f o r about
180 mainly white c o l l a r occupational classes.
Unemployment d a t a b y o c c u p a t i o n a l c l a s s
are
published
by
the
A u s t r a l i a n Bureau of
S t a t i s t i c s a n d b y t h e New Z e a l a n d
Department of S t a t i s t i c s .
S a d 1 y,
this
data
proved
unusable
because
the
o c c u p a t i o n a l c l a s s i f i c a t i o n s were q u i t e d i f f e r e n t
t o those f o r migration and
s a l a r i e s d a t a and could not
be
b r o k e n down a n d r e a g g r e g a t e d t o b e c o n s i s t e n t w i t h t h a t d a t a .
To c o m p o u n d
t h e problem, t h e Department of Labour a l t e r e d t h e
U n t i l t h e March q u a r t e r
1981
b a s i s o f i t s d a t a i n March 1981.
unemployment
was c l a s s i f i e d a c c o r d i n g t o o c c u p a t i o n p r e v i o u s 1 y
held
whereas
after
that
time
unemployment
was
classified
according t o occupation
now s o u g h t .
For t h e s e reasons t h e
u n e m p l o y m e n t d i m e n s i o n was i g n o r e d a l t o g e t h e r i n t h i s s t u d y .
'
Using
the
Department
of
S t a t i s t i c s and
PA
Management
Consultants
data
i t was p o s s i b l e t o c o n s t r u c t t w e n t y - o n e
occupational classes only.
The
reason
that
o n l y twenty-one
occupational
classes
could
be
used
was
that
i t was v e r y
d i f f i c u l t t o derive c o n s i s t e n t sets of
migration
and
income
data
because
the
different
sources
used
employed q u i t e
different
systems
of
occupational
classification.
The
occupations
used a r e l i s t e d i n Table 8 and were d e f i n e d on t h e
b a s i s of job
descriptions
by
the
Department
of
Statistics
( 1976,
updated)
a n d PA M a n a g e m e n t C o n s u l t a n t s ( 1 9 8 4 ) .
From a
s t a t i s t i c a l p o i n t o f v i e w t h i s s m a l l number i s b a r e l y a d e q u a t e
e v e n when d a t a
from e a c h of t h e t h r e e y e a r s is pooled.
It
s h o u l d a l s o be p o i n t e d o u t t h a t t h e c l a s s i f i c a t i o n s c o v e r
only
white c o l l a r occupations.
TABLE 8
O c c u p a t i o n a l C l a s s i f i c a t i o n s Used i n R e g r e s s i o n A n a l y s i s
Occupation
Number
New Z e a l a n d S t a n d a r d
Classification of Occupations
( 3 d i g i t level)
Description
- - - - - - - - - - - - - - - - - - - - - + - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
21 1
General managers
Other managers
( except production)
21 9
Sales supervisors
Technical salesmen
and s e r v i c e a d v i s o r s
Commercial
t r a v e l l e r s and
manufacturers'
agents
Accountants
Systems a n a l y s t s
S t a t i s t i c a l and
mathematics
technicians
Economists
TABLE 8 ( c o n t i n u e d )
Occupation
Number
New Z e a l a n d S t a n d a r d
Classification of Occupations
( 3 d i g i t l e v e l )
Description
Bookkeeping and
c a l c u l a t i n g machine
operators
Personnel and
occupational
specialists
Buyers
Production managers
except farm)
(
C i vi1 engineers
Civil engineering
Technicians
Draughtsmen
Stenographers,
t y p i s t s and
teletypists
Bookkeepers and
cashiers
Telephone and
telegraph operators
Chemists ( e x c e p t
pharmacists)
036
21
Chemical e n g i n e e r i n g
technicians
...............................................................
6.3
The Model:
Emisration
I n t h e a b s e n c e of d a t a o n d i s c o u n t e d l i f e - t i m e
after
tax
incomes
two d i m e n s i o n s o f r e m u n e r a t i o n were used.
They were
t h e d i f f e r e n c e i n mediani3 annual
s a l a r y before
t a x between
Australia
a n d New Z e a l a n d a n d t h e
difference
between t h e
i n t e r q u a r t i l e ranges.
One w o u l d e x p e c t t h a t a p o s i t i v e d i f f e r e n c e
between median
income
i n A u s t r a l i a w i t h r e s p e c t t o New Z e a l a n d w o u l d i n d u c e
emigration.
I n contrast, i f the
difference
i n interquartile
r a n g e s i s a n i n d i c a t o r o f v a r i a b i l i t y i n e x p e c t e d income ( i n
a
positive difference
t h e absence of
data on variances),
expected t o
i n A u s t r a l i a w i t h r e s p e c t t o New Z e a l a n d c o u l d b e
reduce
emigration because
the
Australia
income would be
p e r c e i v e d a s more " r i s k y " t h a n t h e N e w Z e a l a n d i n c o m e .
I t might be
argued t h a t ,
i n the
case of
white c o l l a r
workers,
f e w would a c t u a l l y l e a v e f o r A u s t r a l i a w i t h o u t f i r s t
If
this
is
true
then
a
wider
securing a
position.
i n t e r q u a r t i l e r a n g e i n A u s t r a l i a might be i n t e r p r e t e d a s a n
i n d i c a t o r of p r o s p e c t s of advancement and hence a n inducement
t o emigrate.
Therefore,
i n e s t i m a t i o n , one would e x p e c t t h e
s i g n on t h e income d i f f e r e n t i a l t o be p o s i t i v e
while there
would be
ambiguity a s t o the
s i g n on t h e
difference i n
i n t e r q u a r t i l e ranges.
Two b a s i c m o d e l s w e r e e s t i m a t e d , o n e u s i n g d a t a
for basic
s a l a r i e s and t h e o t h e r u s i n g d a t a f o r t o t a l s of remuneration
defined t o include basic
salaries plus
the
cash values of
as
motor
vehicles,
employers'
fringe
benefits
such
c o n t r i b u t i o n s t o s u p e r a n n u a t i o n , f i n a n c i a l a s s i s t a n c e and s i c k
leave entitlements.
Intuitively,
o n e would e x p e c t t h e t o t a l
remuneration v a r i a b l e s t o be b e t t e r e x p l a n a t o r y v a r i a b l e s t h a n
t h e b a s i c s a l a r y v a r i a b l e s b e c a u s e t h e y more f u l l y r e f l e c t t h e
pecuniary rewards attached t o
an
occupation.
However,
d e p e n d i n g o n p r e f e r e n c e s , m i g r a t i o n d e c i s i o n s m i g h t b e made o n
t h e basis of basic s a l a r i e s because the basic s a l a r y represents
income t h a t
c a n be s p e n t a t t h e d i s c r e t i o n o f t h e r e c i p i e n t .
F r i n g e b e n e f i t s s u c h a s t h e use o f a motor v e h i c l e a r e t i e d
in
the sense that
the recipient
h a s no c h o i c e b u t t o a c c e p t
I t h a s become t h e p r a c t i c e o f some
employers
payment i n k i n d .
t o offer
f l e x i b l e r e m u n e r a t i o n p a c k a g e s a n d t h e new f r i n g e
b e n e f i t s t a x e s i n b o t h New Z e a l a n d a n d A u s t r a l i a w i l l r e d u c e
A further
t h e advantages of
fringe
benefits
t o employers.
p o s s i b i l i t y i s t h a t b a s i c s a l a r i e s a r e more v i s i b l e t h a n f r i n g e
benefits
from a distance.
F o r e x a m p l e , d a t a o n a v e r a g e wage
r a t e s a r e more e a s i l y a n d c h e a p l y a c c e s s i b l e t o p r o s p e c t i v e
migrants t h a n d a t a on f r i n g e b e n e f i t s .
The
estimating
form of
t h e e m i g r a t i o n f u n c t i o n was
expressed i n l o g i s t i c p r o b a b i l i t y form s o a s t o r e s t r i c t values
of
the
dependent v a r i a b l e t o l i e between z e r o and unity.
The
f u n c t i o n was
w h e r e ZOUT = n u m b e r o f e m i g r a n t s f r o m New Z e a l a n d t o A u s t r a l i a
aged 1 5 t o 59 y e a r s on a permanent o r l o n g term
basis expressed a s a proportion of
the
remaining
labour force f o r each occupational c l a s s (labour
1981 C e n s u s l a b o u r
f o r c e b e i n g t h e New Z e a l a n d
force) ;
e = base of n a t u r a l logarithms;
a = a constant;
B = a vector of c o e f f i c i e n t s ;
Z = a vector of explanatory variables,
i n t h i s case
the
differences
in
median
incomes
and
interquartile
ranges,
both between A u s t r a l i a and
New Z e a l a n d ; a n d
u = a n e r r o r t e r m e x p l a i n e d below.
I n l i n e a r f o r m t h e model c a n b e e x p r e s s e d a s
LZOUT =
a
+ BZ + u
(
2)
w h e r e LZOUT = n a t u r a l l o g a r i t h m o f ZOUT.
I t i s h i g h l y u n l i k e l y t h a t u i n t h e above e q u a t i o n s would
conform t o t h e usual assumptions.
Because t h e d a t a i s grouped
i n t o c l a s s e s w i t h d i f f e r e n t numbers
of
observations i n each
u i s u n l i k e l y t o be c o n s t a n t f o r a l l
c l a s s t h e v a r i a n c e of
is,
the
error
term
is
likely
to
be
classes,
that
heteroscedastic,
so that
o r d i n a r y l e a s t s q u a r e s w i l l produce
estimated parameters t h a t a r e not
efficient.
To c o m p l i c a t e
matters further,
when o b s e r v a t i o n s f r o m a l l t h r e e y e a r s a r e
pooled
in
estimation,
time
series
errors
might
be
a u t o c o r r e l a t e d i n which c a s e ,
once again,
ordinary least
parameter
estimates.
Given
squares w i l l produce i n e f f i c i e n t
t h e l i m i t e d number o f
years
of
data
n o c o r r e c t i o n was
attempted
for
autocorrelation
but,
to
cope
with
2
was
estimated
using a
heteroscedasticity,
equation
generalised l e a s t squares procedure
by
which
data
was
transformed and weighted a p p r o p r i a t e l y .
A
f u r t h e r p o i n t is t h a t , a l t h o u g h a r a t i o n a l migrant might
be' e x p e c t e d
t o consider
p u r c h a s i n g power
parity i n
the
migration decision,
the
required
information is not e a s i l y
(1985)
accessible i n practice.
Therefore, a s Brosnan and Poot
suggest,
t h e d e c i s i o n m i g h t m o r e l i k e l y b e made o n t h e b a s i s
of raw remuneration d a t a o r d a t a a d j u s t e d f o r t h e exchange r a t e .
T h e r e i s n o a p r i o r i way o f k n o w i n g w h i c h i n f o r m a t i o n i s u s e d
b y m i g r a n t s s o s e p a r a t e r e g r e s s i o n s were e s t i m a t e d f o r e a c h o f
t h e t h r e e forms of data.
R e s u l t s a r e d i s c u s s e d i n S e c t i o n 6 . 5.
6. 4
The Model:
Immiaration
Recent e m p i r i c a l s t u d i e s have g e n e r a l l y r e l a t e d immigration
t o previous emigration,
implying that
much
trans-Tasman
r e t u r n i n g a f t e r some t i m e i n
i m m i g r a t i o n i s New Z e a l a n d e r s
Australia.
Therefore, i n t h i s study, trans-Tasman
immigration
was
explained
by
emigration three years earlier.
The
e s t i m a t i n g f o r m o f t h e m o d e l was s i m i l a r t o e q u a t i o n 2 a b o v e ,
LIN = c + B LAGOUT + u
(
3)
w h e r e LIN = n a t u r a l l o g a r i t h m o f Z I N , t h e n u m b e r
of
migrants
f r o m A u s t r a l i a t o New Z e a l a n d a g e d 1 5 t o 5 9 y e a r s
o n a permanent o r l o n g term b a s i s e x p r e s s e d a s a
proportion of
the existing labour force f o r each
occupational
c l a s s ( l a b o u r f o r c e b e i n g t h e New
Z e a l a n d 1981 C e n s u s l a b o u r f o r c e ) ;
LAGOUT = n a t u r a l l o g o f t h e
number
of
migrants
f r o m New
Zealand
t o A u s t r a l i a t h r e e y e a r s e a r l i e r t h a n LIN;
and
u = a n e r r o r term.
A s i s t h e c a s e w i t h t h e e m i g r a t i o n model, t h e e r r o r t e r m i s
l i k e l y t o be
h e t e r o s c e d a s t i c and might a l s o be t i m e s e r i e s
A generalised least
squares procedure
was u s e d
correlated.
therefore,
t o take heteroscedasticity i n t o account
b u t no
c o r r e c t i o n f o r t i m e s e r i e s c o r r e l a t i o n was a t t e m p t e d .
Results
a r e d i s c u s s e d i n S e c t i o n 6 . 5.
6.5
Reqression
R e s u l t s and
is cuss ion
Selected regression
r e s u l t s a r e s e t o u t i n T a b l e 9.
The
p r e f e r r e d equation f o r emigration used b a s i c remuneration
data
unadjusted
f o r e i t h e r exchange
r a t e s o r p u r c h a s i n g power
parities.
T e s t s t a t i s t i c s a r e s a t i s f a c t o r y and t h e s i g n on t h e
median remuneration v a r i a b l e i s a s expected.
Nevertheless,
R2
i s r e l a t i v e l y low and t h i s
raises
the
possibility that
the
is
poorly specified.
T h i s d e f i c i e n c y might
be
equation
r e c t i f i e d i f a data base t h a t
includes
unemployment
data is
developed.
The f a c t
t h a t i t i s a b a s i c wage a n d s a l a r y e q u a t i o n t h a t
i s m o s t r o b u s t s u g g e s t s t h a t t h e b a s i c wage o r s a l a r y c o m p o n e n t
much m o r e i m p o r t a n t d e t e r m i n a n t
of
i n remuneration is a
m i g r a t i o n flows t h a n a r e f r i n g e b e n e f i t s such a s motor v e h i c l e s
A s mentioned above, t h i s
o r s u b s i d i s e d s u p e r a n n u a t i o n schemes.
might
be
because
basic
remuneration
c a n be
spent
in
a
d i s c r e t i o n a r y f a s h i o n whereas
f r i n g e b e n e f i t s are " t i e d " o r
i s more
visible
t o
potential
because basic
remuneration
migrants.
However,
a s emphasised
earlier
the
econometric
results
s h o u l d be
interpreted
with
caution
because
of
inadequacies i n the data.
Results
of
the
i m m i g r a t i o n model a r e a l s o s u m m a r i s e d i n
On t h e b a s i s o f t h e
test
s t a t i s t i c s t h e model As
T a b l e 9.
r e a s o n a b l e r o b u s t a 1t h o u g h , a s i n t h e e m i g r a t i o n e q u a t i o n s ,
RZ
is quite
low.
This equation adds l i t t l e
to
empirical
knowledge,
except t h a t
the
r e s u l t s usually found f o r highly
aggregated m i g r a t i o n d a t a have
been
conf irmed
in
the
It
c e r t a i n l y appears t h a t a substantial
cross-section
data.
p r o p o r t i o n o f i m m i g r a t i o n t o New Z e a l a n d f r o m A u s t r a l i a i s
r e t u r n migration.
TABLE 9
Resression Results
...............................................................
Constant
Coefficient
t (d f = 62)
R2
2. 7 6
15. 633,
= 0 . 57
MDDIFB"
QRDIFB~
0. 0 3
0 . 02
9. 089'
SEE = 1 . 0 0 6
...............................................................
Constant
Coefficient
LAGOUT
- 6 . 05
0. 3 9
15. 509'
5. 824*
SEE = 0 . 9 4 5
I
c o e f f i c i e n t s c a l e d b y 1 0 , 000
*
s i g n i f i c a n t a t t h e 99% l e v e l
**
s i g n i f i c a n t a t t h e 95% l e v e l
Notes:
1.
2.
3.
4.
5.
of determination adjusted f o r
freedom
DW = D u r b i n - W a t s o n s t a t i s t i c
SEE = s t a n d a r d e r r o r o f t h e r e g r e s s i o n
= F statistic
F
Regressors a r e defined as:
R2
= coefficient
degrees
of
MDDIFB = d i f f e r e n c e i n
median
remuneration
between
Australia
and
New
Zealand,
excluding
fringe
benefits, etc, f o r each occupational category;
remuneration
QRDIFB = d i f f e r e n c e i n i n t e r q u a r t i l e r a n g e o f
Zealand,
excluding
between
Australia
and
New
fringe
benefits,
etc,
for
each occupational
category;
LAGOUT = n a t u r a l l o g a r i t h m o f t h e n u m b e r o f e m i g r a n t s t h r e e
years earlier.
CHAPTER 7
CONCLUSION
In t h i s report
an overview of
d a t a on m i g r a t i o n and
Australia has
r e m u n e r a t i o n b y o c c u p a t i o n f o r New Z e a l a n d a n d
been
presented.
It
is
clear,
that
for the
occupations
considered, migration patterns
and remuneration
vary quite
considerably.
U n f o r t u n a t e l y , t h e r e i s no c o m p r e h e n s i v e s e t o f
d a t a t h a t might enable d e t a i l e d a n a l y s i s of l a b o u r m o b i l i t y and
l a b o u r market
f l e x i b i l i t y on a n o c c u p a t i o n a l
basis.
This
There is a need
report is a tentative s t e p i n that direction.
f o r more
r e s e a r c h on t h i s
subject
a n d c e n s u s d a t a i n New
Zealand and A u s t r a l i a might p r o v i d e a u s e f u l s t a r t i n g p o i n t .
Perhaps
data
on
occupations
Zealand.
I
Survey t h a t
classified i
statistically reliable
t h e major problem is t h a t
remuneration
by occupation a c r o s s a
range
of
a r e not
g a t h e r e d by any o r g a n i s a t i o n i n N e w
n Australia
i t i s o n l y t h e a n n u a l Labour Market
is
not
produces reasonably r e l i a b l e d a t a but t h i s
n t h e s a m e way a s New Z e a l a n d d a t a .
Department
of
S t a t i s t i c s d a t a on m i g r a t i o n could y i e l d
r e a s o n a b l e information on l a b o u r m o b i l i t y between N e w Zealand
and A u s t r a l i a but
until
a
more s u i t a b l e s u i t e o f d a t a o n
r e m u n e r a t i o n i s d e v e l o p e d s e r i o u s e m p i r i c a l work o n l a b o u r m a r k e t
f l e x i b i l i t y w i l l c o n t i n u e t o be f r u s t r a t e d .
I n C h a p t e r 6 a n a t t e m p t was made t o t e s t t h e h y p o t h e s e s
t h a t d i f f e r e n c e s i n remuneration motivate e m i g r a t i o n and t h a t
r e t u r n migration motivates immigration.
The i n n o v a t i o n i n t h e
of
s t u d y was t o u s e c r o s s - s e c t i o n d a t a a s a c h e c k o n r e s u l t s
recent
econometric e s t i m a t i o n of m i g r a t i o n f u n c t i o n s t h a t used
A
naive l o g i s t i c
h i g h l y a g g r e g a t e d d a t a f o r New Z e a l a n d .
p r o b a b i l i t y model was u s e d a n d t h e r e s u l t s l e n d s u p p o r t t o t h e
findings of other researchers.
An i n t e r e s t i n g o b s e r v a t i o n i s
that
regressions
using basic
wages a n d s a l a r i e s were more
satisfactory than those
using total
remuneration
but
the
r e s u l t s must be i n t e r p r e t e d w i t h c a u t i o n .
It
i s c l e a r t h a t w i t h o u t a much b e t t e r d a t a b a s e , o n e t h a t
i n c l u d e s r e m u n e r a t i o n and employment i n f o r m a t i o n f o r a b r o a d
range of
o c c u p a t i o n s c l a s s i f i e d i n t h e s a m e way a s m i g r a t i o n
be
data,
r e s u l t s of
cross-section
migration studies w i l l
As
i n economics i n general, a migration t h e o r y
unreliable.
that
"works"
with
either
highly
aggregated
data
or
disaggregated
d a t a c a n b e h e l d w i t h more c o n f i d e n c e t h a n o n e
t h a t "works" o n l y w i t h a g g r e g a t e d
data.
Wherever
possible
d i s a g g r e g a t e d d a t a s h o u l d be sought and used t o e m p i r i c a l l y
t e s t economic models.
The m o d e l s p r e s e n t e d h e r e
represent
a
step i n that direction.
FOOTNOTES
1.
D e f i n e d t o be f o r p e r i o d s o f t w e l v e months
of
more.
The
declarations a r e of
i n t e n t i o n s and unforeseen circumstances
which r e d u c e o r i n c r e a s e t h e p e r i o d o f a c t u a l a b s e n c e from, o r
Some w r i t e r s ,
r e s i d e n c e i n , New Z e a l a n d w i l l s o m e t i m e s a r i s e .
assert
that, f o r t h i s reason, net
f o r example Gould ( 1 9 8 4 )
m i g r a t i o n s h o u l d be d e t e r m i n e d a s t h e d i f f e r e n c e b e t w e e n t o t a l
a r r i v a l s and d e p a r t u r e s .
However, i n economic a n a l y s i s i t i s
r e a l l y i n t e n t i o n s t h a t m a t t e r , e s p e c i a l l y i f t h e i n t e r e s t is i n
understanding both emigration and immigration.
I n economic
a n a l y s e s t h e r e a s o n s why i n t e n t i o n s a r e n o t
a l w a y s met
are
themselves of i n t e r e s t .
2.
D a t a f o r o t h e r g r o u p i n g s a r e a v a i l a b l e b u t t h e 1 5 t o 59
y e a r o l d g r o u p i s a p p r o p r i a t e when t h e
interest
is
in
o c c u p a t i o n a l s t a t u s of the migrants
3.
I n c o n s t r u c t i o n o f t h e i n d i c e s t h e D e p a r t m e n t c o n s i d e r s 461
occupations, a l l of
which c a n be
identified
with specific
p o i n t s i n awards, agreements o r s i m i l a r documents.
Therefore,
i
s
l
i
k
e
l
y
t
o
b
e
q
u
i
t
e
g
o
o
d
.
H
o
w
e
v
e
r
,
t o match
t h e nominal d a t a
the quality i n the
nominal i n d e x t h e p r e v a i l i n g i n d e x would
have t o be v e r y c a r e f u l l y c o n s t r u c t e d i n d e e d .
The l o g i s t i c s
and expense of
conducting a regular census r u l e t h i s option
out.
F u r t h e r m o r e , a s t a t i s t i c a l l y a d e q u a t e random s a m p l e would
s t i l l r e q u i r e v e r y d e t a i l e d i n f o r m a t i o n t o compute a p p r o p r i a t e
weights.
F o r e x a m p l e , i n a r r i v i n g a t a n a v e r a g e wage r a t e f o r
a given occupation, average r a t e s f o r each respondent firm t o a
s u r v e y s h o u l d be w e i g h t e d a c c o r d i n g t o t h e s i z e o f
the
firm.
A t
present,
t h i s i s n o t done by t h e Department of S t a t i s t i c s
because time, s t a f f and f i n a n c i a l c o n s i d e r a t i o n s c o n s t r a i n t h e
d e t a i l of i n f o r m a t i o n s o u g h t by s u r v e y .
A n o t h e r p r o b l e m i s t h a t g e o g r a p h i c a l d i s t r i b u t i o n df s u r v e y
r e s p o n d e n t s might n o t be r e p r e s e n t a t i v e .
When t h e
s a m p l e was
o r i g i n a l l y c o n s t r u c t e d i n 1976 i t might have been but s i n c e
t h e n n o a t t e m p t h a s b e e n made t o e n s u r e t h a t i t r e m a i n s s o .
T h e D e p a r t m e n t i s aware o f t h e s e p r o b l e m s , i s m a k i n g s o m e
minor m o d i f i c a t i o n s
t o the
i n d i c e s a t p r e s e n t and i n t e n d s a
m a j o r r e v i e w t w o y e a r s f r o m now.
4.
R e t r o a c t i v e adjustments a r e i n c l u d e d i n t h e nominal
index.
The p r e v a i l i n g i n d e x i s a d j u s t e d o n a n a d hoc b a s i s s o t h a t t h e
p r e v a i l i n g i n d e x never f a l l s below t h e nominal.
5. I n
many c o u n t r i e s e m p l o y e r s a r e l e v i e d
t a x e s on c a s h
payrolls
a s a general
revenue r a i s i n g e x e r c i s e o r t o fund
s o c i a l s e c u r i t y o r workers'
a c c i d e n t compensation schemes.
is
an i n c e n t i v e f o r employers t o minimise cash
Thus,
there
payrolls.
the
relevance
6.
I am g r a t e f u l t o J o h n Wood f o r p o i n t i n g o u t
of t h e X - e f f i c i e n c y l i t e r a t u r e t o t h e s t u d y o f f r i n g e b e n e f i t s .
7.
" F i r s t reported" data a r e not adjusted t o take
retroactive
is
a
more
c h a n g e s i n n o m i n a l wage r a t e s i n t o a c c o u n t .
This
r e l i a b l e index f o r measuring a c t u a l r a t e s a t survey date.
8.
W e i g h t s u s e d f o r s c a l i n g were d e r i v e d f r o m d a t a
on
actual
wage
rates
s u p p l i e d c o n f i d e n t i a l l y by
the
Department
of
Statistics.
9.
M e d i a n r a t h e r t h a n mean d a t a w a s u s e d t o r e d u c e t h e
effect
of extreme observations.
F o r many o c c u p a t i o n s t h e r e w e r e
over
1000 o b s e r v a t i o n s
but i n o t h e r s t h e r e were fewer t h a n 10.
In
t h e s e c a s e s e x t r e m e o b s e r v a t i o n s w o u l d a f f e c t t h e mean
whereas
t h e median i s less s u s c e p t i b l e t o extreme o b s e r v a t i o n s .
10. P u r c h a s i n g power p a r i t y i s d e f i n e d a s t h e
volume
of
real
goods and s e r v i c e s t h a t c a n be p u r c h a s e d w i t h
a
given
income
expressed
in
a numeraire currency.
I f t h e New Z e a l a n d d o l l a r
is the
numeraire
the
purchasing
power
parity
income
i n
Australia
is t h e A u s t r a l i a n income a d j u s t e d by t h e New Zealand
d o l l a r exchange r a t e and t h e A u s t r a l i a n p r i c e l e v e l .
This
is
t h e a p p r o p r i a t e concept of income i f t h e migrant i s r a t i o n a l i n
economic t e r m s by s e e k i n g t o maximize consumption of r e a l goods
and
services
over
his
or
her
lifetime.
For
a
detailed
d i s c u s s i o n o f t h e c o n c e p t s e e OECD ( 1 9 8 2 ) .
1 1 . A s u r v e y was
carried
out
i n . 1979 i n
which
individual
were
interviewed.
Their
reasons
f o r l e a v i n g New
emigrants
Zealand v a r i e d widely although
economic
considerations
were
very important.
S e e B a r r i n g t o n a n d Davey ( 1 9 8 0 ) .
12. I t s h o u l d be emphasised t h a t t h i s w i l l i n t r o d u c e b i a s
into
the
econometric
model
because
of
the
effects
of
omitted
variables.
O m i t t i n g a r e l e v a n t e x p l a n a t o r y v a r i a b l e means t h a t
Moreover t h e b i a s w i l l n o t
p a r a m e t e r e s t i m a t e s w i l l be b i a s e d .
decline
as
sample
size
grows s o p a r a m e t e r e s t i m a t e s w i l l be
inconsistent a s well.
See f o r example
Pindyck
and
Rubinfeld
( 1 9 8 1 , C h a p t e r 5).
Of c o u r s e , i f t h e u n e m p l o y m e n t d i m e n s i o n i s
i r r e l e v a n t t h e r e i s no p r o b l e m
but,
then,
there
i s n o way
of knowing u n l e s s t h e h y p o t h e s i s c a n be t e s t e d .
13.
S e e f o o t n o t e 9.
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S.
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Brown,
M.
(19711,
A
Utility
Maximisation
Approach
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Multipolar
Migration
under
Uncertainty.
D e p a r t m e n t o f E c o n o m i c s , D i s c u s s i o n P a p e r No. 2 0 9 , S t a t e
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of
New
York
at
Buffalo.
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in
Mueller, (1982, ch. 2 ) .
B a r r i n g t o n , Rosemary a n d Davey, J u d i t h .
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of
Statistics.
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Belton,
M.
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Kneisner,
Thomas
Fleisher,
Labour
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Gould,
Standard
Printer,
J.
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APPENDICES
APPENDIX FIGURE 1
Nominal and Prevailing Weekly Wage Rates Indices
Professional , Technical and Re1 ated Workers
Index
(1977 = 1000)
Prevai 1i ng
l
l
I
0
I
I
2
1977 (Dec)
I
I
4
I
I
6
I
I
8
I
I
10
I
I
12
I
I
14
I
I
16
I
,
18
l
l
20
l
l
22
l
,
24
,
l
26
r
l
28
l
l
l
30
1985 (Sep)