New Zealanders have become increasingly concerned about the state of the labour market, with the Westpac McDermott Miller employment confidence index falling 5.7 points to 102.8 in the June quarter, the lowest level in two years.

The current conditions index dropped 6.8 points to 96.1 and the employment expectations index declined five points to 107.3.

“The main concern that’s weighing on workers’ confidence levels is weakness in earnings growth,” said Westpac chief economist Dominick Stephens.

“Only a very low number of workers are expecting that their earnings will increase over the coming year.”

New Zealand wages growth has been restrained by a surge in net migration where new migrants and returning expats have expanded the size of the workforce, meaning employers haven’t had to bid up pay.

Government data in May showed the labour cost index rose 0.3 per cent in the March quarter, the slowest pace since March 2014.

The Westpac McDermott Miller survey of 1,581 people found a net 20.6 per cent reported earnings had gained from a year ago, down from 31.3 per cent in the March survey, while expected earnings growth was a net 27.8 per cent, down from 32.9 per cent.

Respondents grew more pessimistic about job opportunities, with a net 28.5 per cent saying it was hard to get jobs, compared to 25.5 per cent in March, while a net 13.3 per cent expecting it will be hard to get a job in a year’s time, up from 9.1 per cent in the first quarter.

Perceived job security also deteriorated, with a net 7.4 per cent saying they had more security over the coming year, down from 13.3 per cent in the March quarter.

Employment confidence fell in 10 of the 11 regions, with Bay of Plenty the only area to show improvement.