The Governor of the Reserve Bank of Australia (RBA), Philip Lowe has called for payrises for Public Servants around Australia as a way of stimulating the economy and resolving the nation’s low levels of wage increases in recent years.
Addressing the House of Representatives Standing Committee on Economics in Canberra, Dr Lowe (pictured) said that caps of 2% and 2.5% on Public Service salaries had cemented low wages in the private sector and unless they went up, Australian workers would be unlikely to win decent payrises for three years.
“”Wage caps in the public sector are cementing low wage norms across the country.” Dr Lowe said.
“The norm is 2 to 2.5 per cent and that is partly because of the decisions taken by State Governments.
“My view is that a further pick-up in wages growth is both affordable and desirable.”
Dr Lowe said he understood why Governments looked to limiting their pay rises as a way to improve their Budgetary positions but it was a policy that had a time limit.
He said that as a sector representing almost a third of the Australian workforce, the longer public sector payrises were restricted the more substantial would be the economic impacts it inflicted
He said payrises with a ‘3’ in front of them were his preference with 3.5 per cent the preferred target.
The Governor’s call was welcomed by public sector staff with the Community and Public Sector Union (CPSU) saying the policy of low wages for the public sector was a decision that could be changed.
The Secretary of the CPSU, Nadine Flood said the policy levers that could fix the economy were within the Government’s reach.
“The message to the Government is clear,” Ms Flood said.
“If this Government wants to claim the mantle of responsible economic managers, then it must reverse those policies that hurt jobs and ordinary Australians, because our economy is suffering,” she said.