NSW public sector workers would lose $56,000 from the NSW pay freeze, according to economic evidence presented to the IRC.
Dr Andrew Charlton, who served as Kevin Rudd’s economic adviser during the 2008 global financial crisis, said “freezing public sector salaries is not warranted” in NSW in a report tendered to the IRC.
The report, co-authored with Angela Jackson from Equity Economics, says “the macroeconomic benefits of a pay rise to the 400,000-strong public workforce would substantially outweigh the costs”.
“A 2.5 per cent increase in the average public servant’s income for 2020–21 equates to $2198 in 2020–21, but an increase of $56,150 in future income over the next 20 years.
“A freeze in public sector wages would represent a real cut in incomes for 407,999 employees across the state. This will have a direct impact on the spending by these employees, due to a reduction in disposable income and borrowing capacity.
“This is precisely the opposite direction economic policy needs to be headed to achieve the government’s goal of supporting economic recovery,” it says.
The Equity Economics analysis points out that the current position of the NSW government to cut the real wages of all public sector employees regardless of their role or their level of pay is not consistent with advice given by the International Monetary Fund (IMF).
The IMF recommends any pay freeze:
- exclude priority areas like health, social workers; security workers; transport, and other employees involved In ensuring the continuation of essential services; and
- be progressive in its design, with lower paid public sector workers sharing less of the burden.