The Pigeonhole

PPTA members rejected the Ministry of Education (MOE) pay offer of 1.5% and 1% with clawbacks on existing teaching conditions.

Teachers also expressed frustration and disappointment with the MOE's refusal to negotiate on any of the improved conditions they requested. 

Here's a calculation that works with the one thing the MOE actually offered teachers - the so-called pay rise.

The calculation shows that by July 2012 you would have $1083 in the hand to spend each week, but the cost of the things you spent the money on in 2009 would now be $1123. You could not afford all of the items you were able to buy in July 2009.

Your real purchasing power will have declined by about 4%.

Take your teaching salary

July 2009 Top of scale gross p.a. = $68,980 What you are paid before tax is taken off

Take home pay p.a. = $53,166
What you have to spend after tax

add a tax cut

Take home pay after October tax changes = $55,265
What you have to spend after the tax cut

and 1.5%

July 2010 Gross pay, 1.5% increase = $70,015 p.a.
What you are paid before tax is taken off

Take home pay = $55,990
What you have to spend after tax

and 1%

July 2011 Gross pay 1% increase = $70,715 p.a.
What you are paid before tax is taken off

Take home pay = $56,480
What you have to spend after tax

July 2012 Gross pay still = $70,715 p.a.
Take home pay still = $56,480
Change in take home pay = $  3,314
This is the change in what you have to spend

Change in take home pay = 6.2%

Now add in inflation

Inflation July 2009-2010 = 2.0%
The change in how much the things you buy cost
    July 2010-2011 = 5.1%
    July 2011-2012 = 2.7%
From NZCER consensus estimates

and CPI

Combined CPI change = 10.1% (not added – inflation compounds)
% change in take home pay- % change in CPI = -3.9%

= real purchasing power will have declined by about 4%

So, in July 2009 you had $1020 to spend each week and if you spent it all the cost of what you paid for was $1020.

By July 2012 you would have $1083 in the hand to spend each week, but the cost of the things you spent the money on in 2009 would now be $1123. You could not afford all of the items you were able to buy in July 2009. Your real purchasing power will have declined by about 4%.

If you saved $50 per week in 2009 then you would be able to save just $15 per week in July 2012 with the same lifestyle.