Public sector wage growth comes at the expense of taxpayers

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Analysis by The Weekend Australian reveals that while private sector wage growth has stalled, there has been rapid growth in public sector jobs and wages, which is making the national debt and deficit situation much worse ($):

An analysis of jobs data by The Weekend Australian shows that the rapid expansion in public-­sector employment and wages comes as workers in the private sector face increased job insecurity and record-low salary rises.

… Australian Bureau of Statistics wages data for the June quarter show the public sector is out-­competing the private sector for jobs. While the overall wages growth was the lowest on record, at just 2.1 per cent for the year, public-sector wages grew by 2.4 per cent.

Wages in the retail sector, Australia’s biggest employer, rose by just 0.1 per cent in the quarter compared with 0.6 per cent in the public sector. As secure work in the public sector expands, workers in retail and hospitality face demands by employers to cut ­penalty rates and hire more casual and junior workers.

Private-sector wage growth has stalled amid warnings that Australia’s debt could blow out by more than $100 billion if the budget is wrong in its prediction that the economy will return to pre-crisis growth and if the Turnbull government is unable to win ­Senate support for all of its outstanding savings measures.

Deloitte Access Economics ­director Chris Richardson said part of the windfall gains from the China boom had been spent on more public-sector employees last decade, but these elevated numbers had been maintained after the boom ended.

Prior to 2002, the share of the labour force attributable to core public-administration jobs was about 5.8 per cent. After 2002, when revenue from the China boom began to feed into the budget, it moved to more than 6 per cent of the economy, “and has been on a mild up trend for the last decade and a half”.

Mr Shepherd, a former Bus­iness Council of Australia president, said there was a “risk of squeezing out” the private ­sector because the public sector could offer well-paid and more ­secure employment. “This does not add much to our national prosperity,” he said.

ABS figures show that hours worked in the non-market economy have grown 1.9 per cent in the year to June, outstripping those in the market economy, which grew by 0.1 per cent. Since March 2008, before the global financial crisis, hours worked in non-market ­industries have grown by 24 per cent, ­compared with 4 per cent for the market sector. Excluding ­educa­tion and training, non-market hours worked grew by 29 per cent over the same period.

The ABS defines the non-­market economy as comprising education and training, public ­administration and safety, and healthcare and social assistance.

The growth in non-market hours worked comes as public-sector salary costs for health and education are rising sharply. Salar­ies paid to public-sector workers in education and training rose 43 per cent to $38bn over the same period, while salaries for health workers rose at the same rate to $35bn.

Wages paid to public-sector employees working in public ­administration and safety rose by 30 per cent to $45bn in the seven years to June 2015, even though the number of workers in this category was unchanged at 580,000.

The strongest growth in job numbers and wage bills has been in state government jobs. The number of state government ­employees grew by 10 per cent to 1.476 million in the seven years to June 2015, while federal public servant numbers were virtually unchanged.

Queensland’s Labor government came into office with a promise to increase public-service job numbers, which have grown by 4000 in the year to March. In Victoria, the Labor government has budgeted for a $3.5bn ­increase in public-sector wage costs over the next four years. The Coalition government in NSW has also ­expanded its ­numbers, by 15,000, to 464,000 in the four years to June 2015. ABS data shows that almost one in three Australian workers is now employed part-time or as a casual, up from 21 per cent in the late 1980s.

Read the whole article here ($)

 

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