New Zealand recorded the worst real wage growth of any OECD country over five years, with pay packets 6.4% below 2021 levels when adjusted for inflation.
New Zealand workers have experienced the weakest real wage growth of any OECD nation over the past five years, according to the OECD's latest employment outlook.
The data, released in July 2026, showed that after adjusting for inflation, New Zealand wages were 6.4 percent below their first-quarter 2021 level — the steepest decline among the 37 countries analysed.
What the OECD found
The report examined real wage trajectories across the OECD since the onset of the cost-of-living crisis. Despite persistent nominal wage growth, the picture when prices are factored in was bleak for many countries.
"Real wages were more than 2 percent below Q1 2021 levels in a quarter of countries: Australia, Czechia, Denmark, Italy, New Zealand and Sweden," the report said. "Real wages are near the trough of the cost-of-living crisis only in New Zealand and Australia."
New Zealand's position at the bottom of the OECD real wage growth table caught attention across the Tasman, where Australian commentators noted their own country's 1.4 percent real decline looked almost favourable by comparison. By the OECD's headline measure, Australian real wages fell 1.4 percent over the same five-year period.
Thirteen of the 37 countries analysed — roughly one-third — still had real wages below their pre-cost-of-living-crisis peaks in early 2026. The report noted that wage recovery was slowing in most countries, with annual real wage growth in Q1 2026 lower than a year earlier across most of the advanced economies studied.
The minimum wage picture
The OECD also tracked minimum wages across member nations. New Zealand's minimum wage fell in year-on-year terms in April 2026, alongside those of 10 other countries including Australia, the United States, and Canada. The report did not specify the size of New Zealand's decline.
How economists read the data
Not all analysts accepted the OECD's ranking at face value. Infometrics chief forecaster Gareth Kiernan said the OECD's use of the Labour Cost Index (LCI) — a measure of what employers pay for specific roles, adjusted for compositional shifts in the workforce — was not the ideal basis for international comparison, according to RNZ.
"The LCI adjusts for compositional changes in the workers surveyed so that, for example, the increased number of retail workers in the December quarter due to the Christmas rush doesn't drag down average labour costs," Kiernan said, speaking to RNZ. He said the LCI also adjusts for skill-level changes when someone is promoted, "whereby someone might get a pay rise for being promoted from analyst to senior analyst."
"There's some evidence that the latter adjustments overcorrect, in as much as some of the pay rise associated with someone's job title changing from analyst to senior analyst could reasonably be viewed as part of their normal career progression and increase in experience."
Kiernan said Stats NZ also publishes an unadjusted LCI series, which captures only the compositional changes in the workforce but not skill-level shifts. That measure showed New Zealand real wages were broadly flat over the past year and had fallen 0.1 percent since 2021 — still poor, but less extreme than the OECD figure.
Westpac senior economist Michael Gordon offered a different perspective, drawing on OECD annual wage data rather than the LCI. That series showed New Zealand real wages rising 2.6 percent over five years — "still fairly dismal but not much worse than the OECD average of 3 percent," Gordon said.
Structural roots of the problem
Kiernan said New Zealand's wage growth difficulties were structurally similar to Australia's, but the causes ran deeper than any single factor.
"We aren't very productive when we work, our real incomes end up reflecting that, and everything seems expensive," he said. "It's something that has been particularly problematic this decade."
He pointed to a long-standing productivity shortfall as the underlying driver. "Boosting economic growth by higher migration as we did during the second half of last decade simply masked some of the underlying structural issues and economic problems we were facing, particularly poor productivity growth."
What the data cannot tell you
The OECD figures describe what has happened to wages in aggregate. They do not account for differences between industries, regions, or income bands. Individual workers' experience of purchasing power depends on their specific spending patterns, location, and whether their own wages have kept pace with — or fallen further behind — the headline figures.
This article is for general information only and is not personalised financial advice. Seek advice from a licensed financial adviser (registered on the FSPR) for guidance specific to your situation.