Salary percentiles flatter workers whose real pay went backwards

Stuff’s latest salary ranking explainer is the kind of story that gets forwarded around the office. Percentile tables, built on IRD’s wage and salary distribution data, tell you where a pay packet sits in the national queue. They do not tell you what it buys, how much of it is already spoken for, or whether it is building anything. For employers setting 2027 pay budgets, that gap matters far more than any league table.

The median moved, the money didn’t

Stats NZ’s June 2026 quarter figures put median weekly income from wages and salaries at $1,419, up 2.8% on a year earlier, with full-time median hourly earnings at $38.00. Respectable on paper. But salary and wage rates rose just 2% in the year to June 2026 while annual inflation ran at 4.1%.

Kiwibank economist Alexandra Turcu puts it bluntly: “The cost of things has increased twice as much as the wages that the average Kiwi is getting.” Simplicity chief economist Shamubeel Eaqub says anyone in the same job over the past year has seen real income fall by about 2%, with headline weekly pay rising mainly because people are working more hours, not earning more per hour.

So a worker can climb a percentile while going backwards. Rank is relative. Groceries are not.

Half of pay rises are just keeping up

The more revealing number for employers sits underneath. According to Stats NZ data cited by RNZ, 46% of pay increases in the year to June 2026 were cost-of-living adjustments, up from 41% the year before. Only 21% were employers matching market rates, and just 13% were about keeping staff. Westpac chief economist Kelly Eckhold warns the pattern suggests inflation expectations are now embedded in pay negotiations.

That should worry any business owner. Most of the payroll increase this year bought neither performance nor loyalty. It bought standing still, and it risks feeding the very inflation it is chasing.

Housing gets paid first

The household data shows where the money goes. Stats NZ’s release for the year ended June 2025, published in February 2026, found housing costs consumed $22.30 of every $100 of disposable income. Rent rose 9.0% to $505.50 a week and mortgage interest payments climbed 6.8% to $452.10 a week, against inflation of 2.7% over the same period. The share of households saying their income was not enough, or only just enough, reached 40.6%.

This is not only a low-income problem. Back in 2024, Retirement Commission data reported by RNZ showed only 55% of households earning $100,000 to $149,000 described themselves as financially comfortable, as interest, council rates and insurance bills bit. Six figures put those households high on the percentile table and still left many of them stretched.

Averages hide who actually got ahead

In March 2026 the Reserve Bank framed the issue well, arguing that the cost of living is “ultimately about the purchasing power of incomes”. Since the pandemic began, it said, prices had risen 26% and wages 32%, leaving real wages about 6% higher in aggregate. But that gain was lopsided. Job-switchers captured much bigger real increases, while people who stayed put saw little improvement.

The same illusion shows up in wealth. In 2025, Allianz data reported by the NZ Herald ranked New Zealand the world’s fifth-wealthiest country per capita, but it fell to eighth once real estate was stripped out, with household debt at 113% of GDP. Impressive headline numbers, thin liquid resilience. Salary percentiles work the same way.

Staff are asking for a different deal

Workers have noticed. A July 2026 Sharesies survey found only 18% of employees say their pay meets today’s needs and builds future wealth, while 82% feel wealth is unattainable on salary alone. Some 80% would consider taking part of their pay in shares if offered.

The same survey splits priorities evenly, with 47% wanting a package geared to long-term wealth and 47% prioritising short-term cash. That is a design brief, not a contradiction. One-size base-salary bumps serve neither group well.

Benchmark what pay buys, not where it ranks

Businesses benchmarking purely against percentile tables or competitor salary bands are solving the wrong problem. The better questions are sharper. What share of this year’s increases were reactive rather than strategic? Which roles are losing people to job-switchers who captured the real gains? Would share schemes, KiwiSaver top-ups or flexible benefits retain staff more cheaply than another inflation-matching rise that evaporates into rent?

Inflation will ease eventually. Housing and debt costs will not reset as quickly. Employers who start designing total reward around what pay actually buys will win the next round of hiring. Those still chasing a percentile will keep paying more to stand still.

Sources

• Stuff: Your salary: top 10, here’s how what you earn compares to other Kiwis (2026-10-26)
• Stats NZ: Labour market statistics (income): June 2026 quarter (2026-08-26)
• RNZ: How does your pay compare to the average? (2026-08-06)
• Stats NZ: Household income and housing-cost statistics, year ended June 2025 (2026-02-26)
• RNZ: Six-figure incomes not enough to stop financial stress (2024-09-18)
• NZ Herald: Why Kiwis feel poor despite being ‘rich’ (2025-10-31)
• Sharesies: Survey – Ownership will feature in the future Kiwi pay packet (2026-07-10)