New Zealand recorded the worst real wage growth of any OECD country over the past five years, according to the OECD Employment Outlook 2026 released this month. But that headline needs careful unpacking, because the underlying data is more mixed than a single figure suggests.

RNZ reported the finding on 10 July, citing the OECD's labour cost index (LCI) — a quality-adjusted measure that strips out changes in workforce composition to show pure wage movements. By that measure, New Zealand's real wages fell 6.4 percent below their Q1 2021 level.

However, economists point to other OECD datasets that tell a different story. Westpac senior economist Michael Gordon noted that the OECD's average annual wages series — which measures the average yearly wage per full-time employee across the economy — shows New Zealand real wages rose 2.6 percent over the same five-year period, against an OECD average of about 3 percent. On that measure, New Zealand sits roughly in the middle of the pack.

Infometrics chief forecaster Gareth Kiernan added a third datapoint. Stats NZ publishes an unadjusted labour cost index that doesn't correct for changes in workforce skill composition. On that unadjusted measure, New Zealand recorded no real wage increase over the past year and a 0.1 percent fall since 2021 — much smaller than the 6.4 percent headline figure.

Why the divergence? The OECD's quality-adjusted LCI removes shifts in the workforce mix — changes in occupations, skill levels, and hours worked — to isolate what's happening to wages themselves. That adjustment can push results in different directions when a workforce's composition is shifting through migration or sectoral change. The unadjusted LCI captures raw wage bill movement without that correction, which explains why Kiernan's figure differs sharply from both the OECD's adjusted LCI and Gordon's annual wages figure.

The practical takeaway for policy makers is straightforward: "New Zealand had the worst wage growth in the OECD" is true for one specific, methodologically particular index — not a finding confirmed across all the OECD's wage measures.

Beyond the New Zealand comparison, the OECD report found that real wages remain below Q1 2021 levels in 13 of the 37 countries analysed. Six of those countries — Australia, Czechia, Denmark, Italy, New Zealand and Sweden — were more than 2 percent below that baseline. New Zealand sits in company with several other advanced economies still working through post-pandemic real wage losses rather than as an isolated outlier. The OECD noted that real wages have regained some lost ground in virtually all member countries since the worst of the inflation shock, as Newsroom reported, suggesting that even the worst-affected economies are showing partial recovery rather than continued decline.

The report's full title — "OECD Employment Outlook 2026: Geographic Disparities in Jobs and Incomes" — signals where the analytical focus actually sits. The 2026 edition emphasises geographic disparities in employment and income outcomes within and between countries, a theme that runs through the report well beyond the cross-country wage comparison that generated the RNZ headline. Canada, cited as a comparator case, recorded real wage growth of 1.5 percent year-on-year in the first quarter of 2026, a reminder that the five-year comparison and current-quarter trends can point in different directions even within the same dataset.

For officials and economists wanting to test the LCI-based headline against other measures, the OECD's statistical annex provides a nominal and real wage index for each member country stretching back to Q4 2019. That annex, together with the OECD Data Explorer's average annual wages series, gives them the tools to check the LCI finding before drawing conclusions about where New Zealand's wage performance actually sits relative to its peers.

The data does not yet explain why New Zealand's quality-adjusted labour costs diverge so sharply from its average earnings trend. That gap will likely attract closer scrutiny from Treasury, the Reserve Bank and opposition parties in the weeks ahead, particularly given that any "worst in the OECD" framing carries political weight regardless of which underlying index produced it.