Everything you need to know about salaries in NZ
Let’s boost your salary knowledge.
Last updated: 2 February 2023
What you’ll learn:
- The differences between a salary and a wage
- What’s the average salary in NZ?
- What is the minimum wage in NZ
- What is the living wage in NZ
- What is the gender pay gap
- How to work out if you’re being paid fairly
- How to ask for a payrise
- How to negotiate salary in a job interview
- How to deal with the ‘what is your expected salary’ job interview question
Salaries are important. If you boil down the concept of working to its barest essentials, you agree to give up a big chunk of your life to help an organisation(s) achieve its goals, and in return they pay you a salary.
While, of course, you’d hope to find a job that means more to you than just the money you earn by doing it, there’s no getting away from the fact that a salary is one of the main reasons why we all go to work.
In this article, we’ll break down some of the most important concepts to understand about salaries in NZ. From the difference between a salary and a wage, to the legal minimum wage to how to negotiate a higher salary, this is your one-stop salary knowledge shop.
What’s the difference between a salary and a wage?
People often use the terms salary and wage interchangeably in casual conversation, which has contributed to the blurring of the lines between these two ways of earning a living.
The difference between a salary and a wage is that salaried work usually involves being paid a set amount per year. Your employment contract will tell you how much you’re expected to work (for example. 40 hours per week), and the amount you’re paid is consistent from pay cheque to pay cheque.
By contrast, if you work in a wage-paid role, payment is based on the amount of time you’ve worked in a given pay period. A good example of a sector which tends to pay wages rather than salaries is hospitality, for example, working in a bar. If you’re paid through a wage, you might also be entitled to ‘penal rates’. These are special rates that you might receive as a result of doing things like working extra hours or performing special responsibilities. If this applies to you, it should be stated in your employment agreement.
Staff in sectors such as hospitality are typically paid wages rather than a salary.
Important wage facts for New Zealand
What is the average wage in NZ?
According to Stats NZ, at the time of writing, the median wage is $29.66. By median wage, we mean the amount that, if all earnings were arranged in order, this wage would be the one with exactly half the data above it and half below it.
Median wage is generally considered to be a more accurate measure of average earnings than ‘the mean wage’, because it isn’t impacted by extremes at either end – i.e. people who earn a lot more than the average, and people who earn a lot less.
What is the minimum wage in NZ?
Among Aotearoa’s proudest boasts should be the fact that we were the first country to establish a national minimum wage.
As the name suggests, the minimum wage refers to the lowest legal hourly amount an employer can pay their staff. It’s set by the Government, is reviewed every year, and it’s legally enforceable. If you’re being paid a salary, rather than a wage, you can divide how much you earn per pay period by the number of hours worked to ensure your employer is paying you the minimum wage.
At the time of writing (January 2023) the minimum wage is as follows:
What is the living wage in NZ?
The living wage is a little different from the minimum wage. Unlike the minimum wage, the living wage is not a legal requirement for businesses. Instead, it’s an informal standard which calculates how much a worker needs to earn per hour in New Zealand to afford the necessities of life and be an active participant in their local community. These basic necessities include food, accommodation, transport and childcare.
The living wage is seen as an important tool for fighting inequality and poverty because, if workers are paid this living wage, they should be able to keep up with the true cost of living.
At the time of writing, the living wage in New Zealand is $23.65. This figure is calculated each year by the New Zealand Family Centre Social Policy Unit, and is based on a two adult, two child family where the adults work a total of 60 hours per week (one full-time employee, and the other on half-time).
The research that goes into the living wage involves drawing together a variety of sources of information that provide up-to-date estimates for the cost of necessities. As well as the examples listed above, this includes expenses like household energy, education and exceptional emergency expenses.
As a result, the final calculation involves going through outlays like these item-by-item to come up with a weekly total, then an annual total (taking into account things like tax, accommodation,child support payments and tax credits), and then dividing this total by 52 (the number of weeks in a year) and then by 60 (the number of assumed working hours per week).
A growing number of companies in NZ, including Trade Me, have now committed to paying their employees a living wage as part of their responsibilities towards their staff.
What is the gender pay gap, and how is it calculated?
The gender pay gap refers to the difference in how much men and women earn. In New Zealand, the current gender pay gap (calculated in August 2022 by Stats NZ) is 9.2%. This is calculated by comparing the median hourly earnings of women and men in both full and part-time employment.
While this pay gap has reduced over time, progress has slowed considerably in the last five years. Indeed, the 2022 gender pay gap (9.2%) is actually wider than 2021, when the pay gap was 9.1%.
How to work out if you’re being paid fairly
While it’s important to understand statistics around the average salary, minimum wage, living wage and gender pay gap, you also need to be able to understand whether you’re being paid fairly in your role.
You'll need to be able to track wage trends to determine if you're being paid fairly.
Simply comparing your salary to, for example, the national average salary, isn’t going to achieve that. This is because some sectors are simply paid better than others – for example, someone working in finance would typically earn more than a teacher. So, to ensure that your employer is paying you fairly for the work you’re doing, you need to compare your earnings with people in similar roles.
There are a number of ways you can do this, including:
- Using Trade Me’s free Salary Guide: this easy-to-use guide uses data from Trade Me Jobs listings to show you how different roles are being paid in NZ. As the salary guide is updated regularly, you can be confident that the figures you’re seeing reflect the here and now of earnings in Aotearoa.
- Talking to your network: your network can be an invaluable tool when it comes to establishing if you’re being fairly paid by your employer, That said, while conversations about salary are becoming increasingly normalised amongst professional peers, you probably wouldn’t to ask someone how much they’re being paid unless they’re a close friend, or someone who has indicated that they’re open to such conversations. Approaching someone you don’t know well about this topic could be taken the wrong way.
- Meeting with recruiters or careers advisors: recruitment professionals, and careers advisors, have intimate and up to the minute understandings of trends in the job market, including salaries. Ideally, you’ll talk to a recruiter or careers advisor who specialises in your employment sector, so you can get down into the nitty gritty of earnings, rather than talking in more generalised terms.
How to ask for a payrise
If your salary research indicates that you should be earning more in your current role, you might be thinking about asking your employer for a pay rise. While this can seem like a daunting prospect, we highly recommend having this conversation. Remuneration is important, and you should feel that your employer is paying you fairly for the work you’re doing.
However, there’s an art to a successful pay rise request, and you shouldn’t walk into this conversation without some careful planning in order to get the result you’re hoping for. In particular, you need to consider:
- When you ask: you need to pick your moment. Asking when you know the company is going through a financially tough period, or when your manager is under a lot of pressure shows a lack of awareness, and won’t help your cause. Similarly, don’t try to squeeze this conversation into a meeting focussing on something else. Set up a specific meeting to give the topic the space it deserves.
- Your reasons: simply asking for a pay rise is unlikely to get you what you want. You need to come to this meeting equipped with reasons why you deserve one. For example, if you’ve been consistently outperforming your targets, or if you’ve taken courses that have brought your skillset to a new level, these are solid reasons why the company might want to reward you. Bringing your personal life into it by saying you’ve had an unexpected expense and that you need more money is much less strong.
- Your tone: most importantly, you need to avoid making threats. Saying you’ll quit if you don’t get a payrise is a very bad idea … will you follow through on this threat if they say no? Similarly, you don’t want to apologise for asking, or nervously overtalk. State your reasons clearly and calmly, and be open to a mature dialogue on the topic.
There's an art to asking for a payrise.
How to negotiate pay in a job interview
Instead of asking for a pay rise in your current role, you might find yourself with a job offer in front of you, but the pay isn’t quite what you were hoping for. So, how do you go about negotiating salary in a job interview? Again, there are several important steps you need to take if you want to do this successfully:
- Know your worth: this is where your salary research comes in. Use tools like our free salary guide to equip yourself with the knowledge about how the offered salary compares to similar roles in your sector. This will give you a good basis for negotiation,
- Be confident but professional in your approach: you need to thank the hiring manager for the offer, but be straightforward about your desire to negotiate the salary. You might start the process by saying “Thank you for the offer, I was wondering if there was room to increase the salary somewhat to somewhere in the region of $X - $Y”.
- Provide your reasons: why should the company pay you more? What specialist skills and experience do you bring to the table that merits this extra salary? You can use your salary research, as well as specific attributes to make a strong case here.
- Ask for more than what you’d be happy with: if you start with only a minimal increase on the original offer, and the company negotiates lower, you might still end up with less than what you want, even if it’s an improvement on the initial amount. Of course, you don’t want to go in astronomically high, and make the hiring manager think you’re being.
Another situation you can find yourself in is if the interviewer asks you directly about your salary expectations. Interviewers ask this question to help them get a picture of your skill level relative to the role requirements, to avoid wasting either your time or their time, and to get a grasp of whether you know your own worth.
All of the above points are also very relevant to this conversation, but don’t be afraid to ask for more information about the role if the hiring manager springs this question on you very early in the process. While, of course, you should be familiar with the job description and duties described in the Trade Me Jobs listing, if you feel like you need more information before answering with your expected salary, you’re well within your rights to ask.
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