Data shows wage greed will hurt NSW economy, not just workers
New data from the McKell Institute has revealed that the Perrottet government’s refusal to accept above-inflation wage increases is hurting the state’s economic recovery.
Two new papers in McKell’s data briefing series modeled the impact of limiting Sydney Trains teachers and employees to below inflation, as proposed by Prime Minister Dominic Perrottet. The newspapers find:
- Teachers will face a real pay cut of $ 511 each year if they accept the 2.5% salary cap in the public sector, given that inflation is 3%.
- This will reduce economic activity by $ 347 million per year (This is based on the RBA calculation that those experiencing a positive change in income will increase their marginal propensity to consume by 0.87.)
- Given the large number of teachers in regional communities, falling real wages will reduce regional economic activity (outside Sydney) by $ 135 million.
- Sydney Trains employees will face a real pay cut of an average of $ 927.85 per week, given that the government has proposed 2% and inflation is 3%.
- This wage loss will reduce economic activity in NSW by $ 80.1 million
Michael Buckland, Executive Director, The McKell Institute:
“The government’s artificial 2.5% salary cap has never been a good policy, but it is extremely misguided right now. The economic impact of falling real wages hurts everyone.
“If you give a teacher or a railway worker a well-deserved raise, they will spend it in their community and the local economy will benefit.” There are not many teachers with Swiss bank accounts or funds managed abroad.
“Dom Perrottet knows that the NSW economy is built on consumer spending, and there’s no better way to do that than by giving public sector workers a well-deserved pay rise. . “
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