Inflation Expectations and Wage Bargaining: Evidence from New Zealand

The survey included managers and employees from the same firm. The respondents have to answer questions considering two hypothetical inflation scenarios provided during the survey. The first scenario indicates "suppose that overall prices in the New Zealand economy will increase by 2 % in the next twelve months". The second scenario indicates "suppose that overall prices in the New Zealand economy will increase by 10 % in the next twelve months".

2025-01-06

2025-04-30

1. Inflation perception for last 12 months
2. Inflation expectation for next 12 months
3. Firm's baseline expectations for 12 months-ahead: prices of main product, wage for new hires, wage for current workers, and employment
4. Frequency of wage adjustment
5. Firm's expectations for 12 months-ahead at 2% inflation scenario: prices of main product, wage for new hires, wage for current workers, and employment
6. Under 2 % inflation scenario, firm's expectation for an average employee with job offer 4 % more in wages: wage change immediately, wage change at next scheduled salary negotiation and reasons for not matching outside offer
7. Under 10 % inflation scenario, firm's expectation for an average employee with job offer 12 % more in wages: wage change immediately, wage change at next scheduled salary negotiation and reasons for not matching outside offer
8. Employees expectation of % wage change at next salary negotiation
9. Employees expectation of % wage change by moving to similar job at new firm
10. Employee currently searching for a new job
11. Employee currently searching for work in addition to current job
12. Employee's expectation to search for a new job soon
13. Employee's expectation to search for work in addition to current job soon
14. Under 2 % inflation scenario, employee's expectation to: search for a new job, search for work in addition to current job, wage change 12 months-ahead at current job, and expected wage change through outside job offer (assuming similar firm and similar position)
15. Under 2 % inflation scenario and assume employee respondent receives an outside job offer with 4 % more in wages: employee's expectation of wage change immediately at current job, and employee's expectation of wage change at next scheduled salary negotiation
16. Under 10 % inflation scenario, employee's expectation to: search for a new job, search for work in addition to current job, wage change 12 months-ahead at current job, and expected wage change through outside job offer (assuming similar firm and similar position)
17. Under 10 % inflation scenario and assume employee respondent receives an outside job offer with 12 % more in wages: employee's expectation of wage change immediately at current job, and employee's expectation of wage change at next scheduled salary negotiation

1. Employment at firm
2. Age of the firm
3. Firm's overseas trade share
4. Number of competitors
5. Firm's labor cost
6. Firm's material cost
7. Respondent age
8. Respondent qualification
9. Respondent gender
10. Respondent work experience
11. Employees income

We implemented a survey where participants were managers and employees of the same firm. The survey was conducted by New Zealand Market Research and Surveys Limited, a survey company in New Zealand. The survey company compiled a database of firm managers and their employees that includes their basic contact details. Following the ANZSIC 2006, firms are randomly chosen from four broad industries: manufacturing, trade, construction and transportation, and professional and financial services. The population of firms in the survey was around 4500. The firm inclusion criteria focused on three properties. First, a senior manager and at least one employee of the same firm is willing to participate in the survey. Second, the firm employs at least six workers. Last, the annual sales turnover is at least NZ$30,000.

In the process of randomization of firms, the survey controlled for firm size, industry, and sub-industry. The Statistics New Zealand data for 2020 was used to compute the proportion of firms that fall into each employment size group (6 to 19 workers, 20 to 49 workers, and ≥ 50 workers) for each industry. This allowed to match the survey population with the population of firms in the economy. The response rate for the survey was around 12 percent, that is, 528 firms. Upon contacting employees of these firms for their participation in the survey, there were 1515 responses.

The survey was conducted largely by telephone. Only 27 percent of the respondents (managers and employees) participated in an online version of the survey. During the actual interview process, the Data Research Assistants asked questions from the questionnaire and the responses were recorded in the hard-copy questionnaire as well as audio-recorded. Later, the audio recordings were checked against the responses recorded in the hard-copy questionnaire and then deleted for privacy reasons. The hard-copy responses were then recorded in an Excel spreadsheet. To maintain the quality of the survey, different groups of Data Research Assistants were employed to perform specific tasks. Appropriate ethical considerations were taken during all stages of the survey.

Respondents had to answer questions based on a 2% and 10% inflation scenarios. The order through which they get the scenarios were randomized by a computer.

The 2% and 10% inflation scenarios were randomized for managers and employees. That is, some managers and employees get to answer 10% inflation scenario questions first and then the 2% inflation scenario. The order of scenario was randomized in the survey.

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528 firm managers and 1515 employees

There was no randomized control trial in the survey. Inflation scenarios were randomized for managers and employees.