Summarised by Centrist
New Zealand’s reliance on migration to boost headline economic growth masked deeper problems with productivity, wages and living standards, according to economists responding to a new OECD report.
The report found New Zealand had the weakest inflation-adjusted wage growth among the 37 OECD countries examined over the five years to early 2026.
Using New Zealand’s Labour Cost Index, the OECD estimated real wages were 6.4% below their 2021 level and remained close to the low point reached during the cost-of-living crisis.
Infometrics chief forecaster Gareth Kiernan said the result may exaggerate the decline because the index does not adjust for changes in workers’ roles and skill levels.
An alternative measure showed real wages had fallen only 0.1% since 2021. Westpac economist Michael Gordon said another OECD measure showed real wages had risen 2.6% over five years, slightly below the OECD average of 3%.
But Kiernan said the broader problem remained. New Zealand workers were not producing enough per hour, incomes reflected that poor productivity, and essential goods and services remained expensive.
He said governments had previously lifted overall economic growth through higher migration, particularly during the second half of the 2010s, without resolving those underlying weaknesses.
That population-driven growth made the economy larger in aggregate, but masked the more important question of whether productivity, wages and living standards were improving for each New Zealander.
