The Abbott Government has today signaled that it will crack-down on public sector wages and conditions, with employees to be offered the choice of a three-year wages freeze or the loss of entitlements. From the Canberra Times:
Australia’s 165,000 federal bureaucrats will face a choice of zero pay rises for three years or deep cuts to their entitlements under the Abbott government’s aggressive new approach to its employees.
The hard line on one of the nation’s biggest pay deals is an escalation of the government’s policy of confronting what it sees as overgenerous wage deals for workers…
Employment Minister Eric Abetz… has sought the backing of his cabinet colleagues to take the government’s industrial relations hard line to the enterprise bargaining talks due later this year.
…public servants could get as little as 1.5 per cent a year [pay rise] – or even nothing – unless they agree to surrender some of their 18 days combined carers’ and sick leave and accept an annual cap of 15 days instead.
They would also have to agree to more work performed by fewer employees as the government pushes for ”productivity improvements”…
An objective examination of the ABS’ wages data reveals that the public service has fared very well over the past decade, supporting the Government’s crack-down.
As shown in the next chart, public sector wages have grown considerably faster than the private sector:
Moreover, the public servants have experienced much less volatility in earnings, with their wages growing solidly even during the GFC:
Politically, the decision to crack down on public servants’ pay also makes sense for the Government, since the ACT – where many of the cuts will be concentrated – is a Labor stronghold, and the Coalition does not risk losing any electoral seats.
However, in order for such a program to be effective and actually save the Budget money, the Government would need to ensure that retrenched public servants are not merely re-hired as contractors at a higher cost – as appears to have been the case recently.
