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Economist warns against wage caps

Last week Australia Institute Centre for Future Work economist Troy Henderson spoke to a group of CPSU Members about public sector austerity and wages caps.

He said his work could be summed up with the words “Tasmanians need a pay rise”. 

“Tasmanians need a pay rise is a very powerful message”, he told Members. “The evidence for the need for this pay rise is overwhelming. It’s not usual for the Governor of the Reserve Bank to jump into a debate and say workers need higher wages.” 

Troy spoke about wages caps and how they were often introduced as a fiscal necessity but continued when times were good. He cited our state as an example, with our projected budget surplus but no move from the Hodgman Government to lift the wages cap. 

 “Workers’ share of economic growth is at post-war, near-historic lows.”
He also spoke about the flow on effects of public sector wages to the wider employment market. “In every state or territory the government is the biggest employer. The government dictates what wages should be.”

Troy also told members about the value of the public sector, particularly in regional areas, where he described the workers who deliver these services as the “bedrock of communities” and a “strategic, economic and social asset”


If you listened to Troy’s talk last week or would like to hear more from him and the Centre for Future Work, you can subscribe to the Australia Institute’s Follow the Money podcast on iTunes.

Read more here.

Listen to his full interview with ABC Radio Hobart’s Sarah Gillman here (start at 1:19).

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