Wage freeze reflects dire conditions

17 May, 2017

The Labor Government will seek $518 million in savings from a new wages policy and freeze in a move CCI says reflects the tough decisions the private sector has been having to make.

Wages in the public service account for 45 per cent of WA general government sector expenses – or $13.6 billion out of a total state budget of $29.9 billion.

The existing wages policy of a 1.5 per cent per year increase has been overhauled, with the new policy providing a $19.20 per week increase for a 38-hour week or $1000 per year for public sector employees.

The $1000 limit will be pro rata for part-time and casual employees.

All new and replacement public sector industrial agreements will be subject to the new policy from today.

The wage freeze will affect all positions determined by the Salaries and Allowances Tribunal for the next four years. Legislation will be introduced to implement the freeze.

Premier Mark McGowan says the State’s highest paid employees, including Members of Parliament, need to accept that they need to do some of the heavy lifting and lead by example.

CCI says curbing public sector wage growth is crucial to repairing Western Australia’s state finances.

CCI Chief Economist Rick Newnham says the new policy was a strong step forward towards getting the budget under control.

“Public sector wages are the single biggest area of government expenditure, so it is vital that the WA Government is able to get wage growth under control,” he says.

“This new wages policy will go a long way to bringing the WA budget back to a stable position.

“This will be vital to regain the AAA credit rating and attract new business investment – new business investment means more big projects coming on line, more money injected into WA’s economy and more jobs for workers.

“WA has a critical cash problem and when you have limited taxpayer dollars to spend, no area of state expenditure should escape rigorous scrutiny. Amid challenging economic conditions, the private sector has had to make some very tough decisions, so it is very encouraging that the State Government has stuck to its election commitment to do the same.

“The WA business community commends Premier Mark McGowan, Treasurer Ben Wyatt and Minister for Commerce and Industrial Relations Bill Johnston for implementing this new wages policy and CCI looks forward to working with the WA Government on further savings measures in future.”

► CCI’s Chief Economist, Rick Newnham will talk more about the economy at his next event Reshaping Our World: Technology in Industry. Register for your ticket today.