The Truth About Public Sector Wage Caps.
If one of your biggest employers is arbitrarily holding wage increases to 2% that is going to have a flow-on effect on the private sector economy.
Listen to Troy Henderson, Economist at the Centre For Future Work, discuss the 2% public sector wage cap in his full interview with ABC Radio Hobart here (start at 1:19).
Capping wages in the public sector, in turn, means lower wages in the private sector.
“We’ve seen a big decline in workers share of national income, in fact, it’s down to its lowest level since the 1960s — so workers in general, which means most of us, are not getting their fair share of the economic pie,” says Troy Henderson, Economist at the Centre For Future Work, speaking to ABC Hobart’s, Sarah Gillman.
Henderson, an Economist at the Centre for Future Work, is in Tasmania where the Centre For Future Work is speaking with unions about our research which shows the negative economic and fiscal consequences of the 2% wage cap on public servants.
“We’ve had 27 years of uninterrupted economic growth but the benefits have not been equally shared.
“But if people are struggling with the cost of living pressures and seeing that their wages have gone nowhere over the last 4 or 5 years, that transfers pressure onto other social actors. So whether that is the trade union movement, political parties or other civil society groups there will be someone applying pressure for fair work conditions — but the more people behind that someone, the stronger their voice will be.
“We have an issue all around Australia with public sector wage caps — which are really the just an arbitrary imposition. Having this cap actually causes wage stagnation and contravenes the underlying principle that you should have free and fair bargaining in terms of wage outcomes.
“There are negative economic consequences of artificially suppressing public sector wages. If your biggest employer is arbitrarily holding wage increases to 2% that is going to have flow-on effect into the private sector economy.
“Industrial action and bargaining is what will improve this and will continue to be a feature of our society so we shouldn’t see it as something odd, or something that doesn’t have a legitimate place in our economy. In fact, industrial action is one of the best ways to make sure things like wage stagnation does not occur — and we are seeing this in Australia right now.”
But, it’s not just public sector wage caps affecting your back pocket:
“There are two key features currently affecting how people work and their cost of living pressures,” says Troy Henderson, Economist at the Australia Institute’s Centre for Future Work.
“Firstly, over the last 30–40 years Australia has seen a rise in insecure work and we are currently over 20 per cent casual employment. A minority of Australians have full-time employment with leave entitlements and insecurity is a key factor of how work is changing.
“Secondly, Australia has also borne the brunt of wage stagnation over the last 5 or 6 years — an issue everyone from the Reserve Bank Governor and down is talking about.”