Morrison's race to the bottom

Late this afternoon the Government released a new wages policy. Under the new policy, instead of the 2% per annum cap on pay increases, APS pay increases will be tied to private sector wages.  

Each annual APS pay increase will be capped at the annual seasonally adjusted Wage Price Index (WPI) for the private sector, for the most recently published June quarter.  

In introducing this new policy, the Coalition Government has shown its disregard for the growing problem of wage stagnation in Australia and the need to kickstart the economy.  

Both economist Saul Eslake and former Treasurer Scott Morrison have noted the low wage growth is a significant drag on government revenue and general demand. The RBA Governor Philip Lowe has also said that low wages threaten economic growth and that workers’ incomes need to rise.  

Rather than being a model employer and driving broader economic growth by improving public sector workers’ wages, this government has chosen to lock APS employees into a race to the bottom on wages with the private sector.  

Melissa Donnelly, CPSU National Secretary:  

Our members in the public sector have delivered for the nation this year through floods, fires, droughts and a global pandemic.  

As our nation faces a recession and difficult economic circumstances, the Prime Minister has the power to help get the nation back on its feet by creating good, stable jobs in the public sector, and showing leadership on wages.  

But in effect, by tying public sector wage outcomes to the private sector, the Morrison Government is effectively abdicating its leadership role.  

If the Government wants to stimulate the economy and keep consumer spending up, this is not the way to do it.  

At a time when the Government should be helping workers spend in their local communities, it is cutting wages. The long-term implications of this decision will be felt for years to come.