Where is the fat from the Good Times?

Idiot makes a point about public sector pay increases.

All of these strikes have the same cause: government penny-pinching. Government departments and DHBs are offering nil or derisory wage-rises. And in an environment of high inflation and rising living costs (GST, childcare etc), that is exactly the wrong offer to make to highly trained and irreplaceable staff whose services are in hot demand elsewhere….

The problem for the government is that not paying them makes everyone suffer. If you don’t pay the doctors, people can’t go to hospital. If you don’t pay the teachers, people have to mind their own kids. And the blame for this goes straight back on the government. The public value the jobs that these public servants do. They know they are overworked and underpaid. And the natural question they ask is why the government isn’t paying them what they’re worth and avoiding the disruption. Which means a big political headache for the government.

But that’s looking at the problem the wrong way.

The question I would be asking is, why are these people so underpaid considering this country just came out of some of it’s most prosperious years ever?

While the complaint is made that these public sector jobs are not being offered real pay increases, the private sector is taking pay cuts.

I personally believe that the real problem is inflation. (The GST increase is simply a tax shifting from income to expenditure.) Have a look at this graph.

Once National got inflation under control, it was held tightly under 3% – usually under 2%. Once Labour got into power, it fluctuated wildly up to 5% at times.

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