Public service wage freeze backlash only to be expected
THE Labour Government this week served itself up what may end up being the biggest steaming pile of trouble of its term.
That pile landed when Finance Minister Grant Robertson and Public Service Minister Chris Hipkins announced the Government had told public department bosses it wanted to freeze wages for most publicsector workers earning more than $60,000 for the next three years, and all of those on more than $100,000.
It provoked an almost immediate outcry from blindsided public sector unions and workers — and a rare firestorm against Labour from its own supporters on social media.
The Police Association called it a ‘‘bombshell’’ that arrived without warning on the morning they met Police Minister Poto Williams to start pay talks.
The PSA had only one day’s notice. The nurses, the teachers, all objected, noting it effectively amounted to a pay cut in real terms at a time of high house prices and as the cost of living was expected to rise.
Labour quickly lost the communications war, appearing to have underestimated the reaction.
Even the most faithful of the party faithful were appalled, struggling to reconcile the move with Labour’s usual philosophy of targeting the very wealthy to try to nudge the ‘‘equality’’ dial — not teachers and nurses and Department of Conservation rangers.
Of particular concern was the decision to freeze the wages of those on $60,000 to $100,000 other than in exceptional circumstances. In this, the ministers even had the gall to note that MPs salaries ($335,000 for Robertson and $296,000 for Hipkins) had also been frozen for three years because of Covid.
It is one thing to freeze the wages of chief executives earning more than the prime minister, but quite another to do so to those on more modest wages. Even $100,000 — which has been seen as the threshold at which ‘‘very wealthy’’ begins for decades — does not go far now in cities such as Auckland or Wellington.
It was seen as especially galling in the Covid19 era, given it was primarily publicsector workers coping with trying to teach pupils during lockdowns, border management, and in the health response.
The Greens opposed it and even National criticised it, arguing nurses, teachers and police were paying the price for Labour fattening up the Wellington bureaucracy.
It is foolish to bite the hand that feeds without a convincing reason, and in this case no compelling reason was given beyond a show of almost symbolic fiscal rectitude.
Robertson said it was a time of ‘‘severe fiscal constraint’’ and what money there was should be used for the wages of those on less than $60,000. That was only 25% of the publicsector workforce.
In trying to convince people, it did not help that the next day the Crown accounts showed the books were
$5.2 billion better off than forecast in December, and the Labour social media team sent out posts boasting of the resilience of the economy and ‘‘confidence in our economic recovery plan’’.
Nobody has been able to say how much the move will actually save the Government, either because nobody has done the calculations, or the Government does not want us to know so will not tell us.
So why bother?
Prime Minister Jacinda Ardern pointed out it was not a ‘‘freeze’’ because wage increases in collective agreements already negotiated (such as the nurses) would still be actioned, and many workers would still get annual increases by moving up through salary grades.
But the Government has already lost the communication war. If it hoped yesterday’s fair pay agreements announcement would take some of the heat off, it might be disappointed.
That pleased those unions that deal mainly with private sector workers (it is also those unions that donate to Labour).
The package included funding for those unions to scale up for the negotiating required.
The agreements will set minimum wages and conditions across an entire industry, or an occupation group. The first likely to be negotiated include cleaners, bus drivers and supermarket workers.
The fair pay agreements will be controversial, but do deliver on one of Labour’s cornerstone promises.
It also raised the unusual situation of a Government implementing pay restraint, but expecting the private sector to do the opposite.
Nor do other consequences of the publicsector ‘‘freeze’’ appear to have been given much heed.
The medical profession warned of the likelihood more medical staff would simply go to Australia for better wages.
A prolonged freeze could also result in a brain drain from core government departments. It is not hard for the likes of economists and analysts to find privatesector jobs.