Bill Mitchell — No justification for public sector wage freezes during the pandemic

I provide a lot of research support for trade unions in wage determination cases in Australia, where wage agreements are uniquely decided in judicial processes. The cases are onerous and highly contested and as an expert witness I am often grilled for lengthy periods by the employers’ barristers in the evidential phase. One of the things that has been relevant in the last year or so has been the wage caps and freezes that government employers are placing on their workforce as a way of ‘saving money’. Prior to the pandemic they were forcing real wage cuts or zero real wages growth on workers under their wage cap strategies as part of their pursuit of fiscal surpluses. Now they are imposing freezes to reduce the size of their deficits. And, the same is happening in other jurisdictions such as the UK. Not only were the wage caps in the public sector damaging the well-being of public workers, in some cases, the lowest paid (cleaners etc), but they were also providing ‘wage guidance’ to the private sector, at a time when household debt is at record levels and consumption growth wage faltering. At a time when consumers are already wary and saving higher proportions of their disposable income, freezing wages is not a responsible thing to do in a pandemic. The UK government, for example, does not need to ‘save money’. But as part of the recovery from the pandemic, the government will benefit from households having been able to pay down debt while saving more and from the maintenance of their real purchasing power. There are no grounds for freezing wages – public or private....

Bill Mitchell – billy blog
No justification for public sector wage freezes during the pandemic
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia