Editorial: Pay freeze – political fool’s gold
Queensland Teachers' Journal, Vol 123 No 4, 5 June 2020, page no. 5
Were you ever given a “gold” nugget as a child only to discover, after you’d made all sorts of plans for your new wealth, that it was iron pyrites, more commonly known as fool’s gold?
Teachers and principals feel like that over Queensland Government proposals for a pay freeze after reaching an enterprise bargaining agreement, in schools and TAFE, not 12 months ago.
So will the Queensland Government and all politicians who support it – because it is bad policy.
I don’t need to rehearse the injustice for QTU members who have worked harder than ever in the first half of this year. I do not need to tell you that breaking EB agreements is industrially unconscionable.
What needs to be said is that a pay freeze is economically foolish, stupid even.
Let’s set the scene
In late 2019, the Australian economy was stagnating. Economic growth was sluggish. The Reserve Bank had virtually exhausted all monetary policy measures. And the federal government was under increasing pressure to abandon plans for a surplus and to stimulate the economy through targeted additional expenditure.
Enter the COVID-19 pandemic and the restrictions necessary to prevent its spread, and an academic debate about the possibility of an economic recession became reality.
Australia is in recession. It has just been confirmed that the economy contracted in the March quarter and the technical definition of a recession – two quarters of negative economic growth – will be fulfilled when the June quarter figures are compiled and published. But it is patently clear now.
Unemployment has doubled. Underemployment – the people who are employed but want more hours – has more than doubled.
State and federal governments have launched stimulus packages to stimulate growth.
So what’s wrong with a pay freeze?
Here’s what I wrote to the Premier about this on 14 May:
“Proposals to freeze public sector pay in response to the economic effects of the pandemic restrictions are counter-productive and would be a repetition of historical economic mistakes.
"Such proposals are based on a type of austerity economics where the policy prescription for government is to rein in expenditure, working towards a balanced budget – “living within its means”– in circumstances of economic recession or depression. It is the economic theory of responses to the Great Depression and its implementation postponed recovery of employment and the economy for many years.
"It is not the role of governments to balance their budgets in times like these. Governments are not households or businesses. The proper role of government is, in a counter-cyclical way, to spend in a targeted way to stimulate the economy and make up for a lack of private sector economic activity, whether as a result of economic or health restrictions. The additional expenditure on health needs and on economic stimulus will add in the short-term to government debt, which will then be paid down in good times of high economic activity and tax revenue. That is an ongoing lesson of the Great Depression.
"Withholding pay increases for teachers and other public sector workers will remove $500 million from circulation in the economy, exacerbating the economic slowdown and slowing recovery, unless it is used (not saved) in a way that has greater economic and/or social impact. No better use has been proposed.
"Instead of withholding pay increases, would it not be better to encourage teachers, principals and other public servants to spend their increases in the local and state economy, to increase economic activity and enhance recovery?”
Reject the emotional blackmail
A campaign of emotional blackmail is being waged against teachers and other public servants as part of the pro-pay freeze campaign. It is based on a notion of shared suffering with those out of employment or underemployed. Somehow the recession is the fault of those employed rather than the economic managers of the economy.
It is intended to induce guilt among those who remain employed and continue to work (hard), and to fool them into working harder for less.
It conveniently overlooks the reality of teachers as the sole bread-winner in a family, or the demands of supporting family members whose employment has been affected.
In spite of our invitation to do so right back in April when talk of a pay freeze suddenly appeared, the government has made no direct connection between the pay freeze and the alleviation of the economic pain felt by other Queenslanders.
Rather than a pay freeze, if there is to be any “sharing of the pain”, it should be in the form of progressive (i.e. affecting more those most able to pay) taxation measures implemented to pay down resulting debt of stimulus packages, if renewed economic activity is insufficient to do so in the future.