It’s payback time.
The Community Public Sector Union (CPSU), having helped bankroll Labor’s victory by donating its members’ funds to the tune of hundreds of thousands of dollars, appears to be now expecting a quid pro quo from Labor for its members by the use of taxpayer funds.
This is evident from the public service wage negotiations currently underway in Canberra for the federal public service.
The deals are being struck for each other’s benefit with other peoples’ money.
Having commenced with an absurd demand for a 20 percent pay increase plus add-ons like unsupervised work from home, the CPSU allowed the government to meet halfway as its opening offer.
CPSU demands 20 percent and the government’s initial offer is 10 percent so what could be fairer than settling in the middle at about 15 percent?
On top of that, the government will grow the public service numbers by more than 10 percent (from 161,000 to 181,000), giving the CPSU more membership potential and income, which in turn can be funnelled straight back to Labor for its election campaigns.
The union officials can promote themselves to their members and the rest of the public service by gaining huge wage increases and extra numbers, securing their trade union future and the Labor party, in turn, reaps its rewards.
A nice jolly money merry-go-round except for one thing—the consequences, let alone at whose expense?
Wage increases not based on productivity increases are, by their very nature, inflationary. In a high-inflation economy being boosted by an inflationary budget setting, wage benchmarks in the public service will have a substantial flow on impact rumbling throughout the whole economy.
Workers are entitled to pursue employment opportunities where they get the greatest reward. Higher wages attract more workers. As do relaxed and comfortable working conditions.
So when the government helps set the pay curve and conditions, watch and see how that will attract the workforce from the productive wealth-creating sector to the non-productive public sector.
This weakens the productive sector and its capacity to pay the taxes needed for wage increases and more relaxed conditions.
Never Have, Never Will Work
It begs the question: at what overall cost are these wage negotiations being determined? Do the negotiators fully comprehend the economic damage that will be left in the wake of their undisciplined wage spendathon?The magic pudding economics of wage increases unrelated to productivity and uncontrolled workforce growth has been tried before, not only in Australia but also in other countries, with the not unexpected same result on each and every occasion.
Ultimately, the economy and wealth-creating sector can no longer tolerate the mismatch between wages and capacity to pay.
As a result, the economy’s nose dives and the cost of living increases, leaving many workers a lot worse off than if moderate and affordable pay increases related to productivity were pursued. Worst-case scenarios include actual job losses.
The lesson never learnt by some sees the lure of benefits today blinding the workers’ representatives to the consequences tomorrow.
If the government were to treat the negotiations with the CPSU as if the money they were offering was their own, potentially prejudicing their own personal future well-being and that of their family, the long-suffering taxpayer may be afforded some relief.
Even if the government’s initial offer was accepted by the CPSU, the hit to the taxpayer will be massive.
Not only will there be a higher wage bill, but there will also be less productivity and an increase in the number of public servants.
The inflation monster will be fed. This is not sustainable.
Strong leadership is required by both governments to resist the massive demands and by union officials not to raise unrealistic expectations which will, in the fullness of time, be undeliverable.
The CPSU might contemplate in the spirit of the union fraternity that their pay rises will be gained from the backs and at the expense of their fellow workers’ hard work in the productive sector.
