Public Health
Wage freeze: “morally questionable and a major economic mistake”
Freezing public sector wages – including those of nurses and midwives – would be economically counterproductive, experts warn.
The state government, through its secretary to the Department of Premier and Cabinet has indicated to Unions NSW that a wage freeze for public sector workers, including nurses and midwives, is imminent when their awards expire on 30 June.
NSWNMA General Secretary Brett Holmes described the government’s move in the midst of the COVID-19 outbreak as “a disgrace”.
“Nurses have been spat on and abused, forced to deal with a lack of Personal Protective Equipment and put themselves, and their families, at risk each shift.
“Some of our members have witnessed a partner become unemployed or have had their shifts reduced. With partners ineligible for welfare, many frontline workers rely on a modest pay increase to help meet rising cost of living pressures.
“And now the Treasurer wants to ignore the efforts of frontline workers and unions operating in good faith, by planning a wage freeze for all public sector workers,” he said.
The proposed wage freeze is consistent with the ideology of many in the Liberal party and the business sector.
Last year Mathias Cormann, the federal government’s finance minister, conceded that low wage growth was “a deliberate design feature of our economic architecture”.
In a recent editorial the Australian Financial Review advocated “tackling some of Australia’s own health sacred cows” in the aftermath of COVID-19.
“This means (taking on) the state-wide, rigid, union-negotiated industrial award agreements for public hospital doctors, nurses and other operational staff,” it said.
Austerity has been a failure
This strategy to suppress wages has been called into question by a growing number of economists who point to the failed austerity policies that followed the last great shock to the world economy – the Global Financial Crisis.
A recent study published by the Centre for Future Work at the Australia Institute found that freezing pay for essential workers “is not just morally questionable – it’s also a major economic mistake”.
“Pay freezes are being imposed at the very moment when public sector workers such as healthcare workers, first responders, teachers and social service providers are performing vital tasks, at personal risk to themselves, to support Australians through the pandemic,” said Dr. Jim Stanford, the lead author of the research.
“The motivation for public sector wage austerity seems more ideological than fiscal or economic. Our research shows these arbitrary pay freezes are both unfair and economically counterproductive.
“Public sector wage austerity imposed after the Global Financial Crisis helped ‘lock in’ historically slow wage growth in the private sector in the years that followed. Since then, wages in Australia have grown at their slowest sustained rate in the post-war era.
“Australia cannot risk letting any COVID-19 recession turn into a depression,” he said.
Other powerful economic institutions like the Reserve Bank of Australia and the International Monetary Fund have also advocated wage increases to bolster sluggish economic growth.
Reserve Bank of Australia governor Philip Lowe has said higher wages would benefit the whole economy.
“A gradual lift in wages growth would be a welcome development and is needed for inflation to be sustainably within the two to three per cent target range,” he said on 3 March this year.
More information: The Same Mistake Twice: The Self-Defeating Consequences of Public Sector Pay Freezes by Troy Henderson and Dr Jim Stanford: https://www.futurework.org.au/pay_freezes_recession_to_depression