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HomePoliticalOn The Ardern Government's Public Sector Wage Freeze

On The Ardern Government’s Public Sector Wage Freeze

By John Braddock, Socialist Equality Group

May 14,
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Zealand’s Labour-led government, which includes the
Greens, recently declared a pay freeze across the public
service for the next three years. The move, which extends a
measure introduced last year during the COVID-19 pandemic,
will inevitably be used to suppress wages in the private
sector as well.

Public Service Minister Chris Hipkins
announced that workers earning more than $NZ60,000 will only
be offered pay increases under “exceptional”
circumstances, while increases for those on salaries over
$100,000 are ruled out. Only about a quarter of public
servants earns less than $60,000 and will theoretically
qualify for pay increases, which still have to be

Tens of thousands of doctors, nurses,
teachers, social workers, border staff, conservation staff,
administrative personnel and others will be hit by the
freeze. Most have already had increases well below the
inflation rate for years with pay packets eaten up by
escalating house prices, rents and basic living costs. The
median weekly income fell by 7.6 percent in the 12 months to
June 2020.

Finance Minister Grant Robertson said
“restraint” was necessary to keep a lid on public debt,
which had skyrocketed during the pandemic, to pay for
“expensive” measures like the wage subsidy. “As the
recovery gets under way, we are keeping a close watch on the
debt taken on during COVID to support the economy,”
Robertson said.

In fact, the government’s response
to the economic crisis has been the same as governments
internationally: an unprecedented handout of billions of
dollars to businesses, which have sacked or short-timed
thousands of workers. The government’s “wage” subsidy
scheme paid over $NZ14 billion to employers. Global
conglomerates including Coca-Cola, McDonald’s, Asahi and
Tesla, along with local NZX-listed companies, claimed
millions in subsidies before handing out huge dividends to

Boasting a “strong economic
bounce-back,” Robertson earlier this year revealed the
economic recovery would cost $60 billion less than the
government was anticipating. Last September Treasury
officials expected the government’s level of debt to jump
from the pre-pandemic 20 percent range, to 48 percent in
2034. The figure is now expected to be 36.5 percent. On May
4, Robertson announced that $1 billion of underspent COVID
money has been kept back for new initiatives.

Robertson nor Prime Minister Jacinda Ardern was able to say
how much money would be saved under the freeze, but the
total wage bill is only about $5 billion of a $108 billion
budget. Robertson said it was important however to “show

In the wake of the 2020 general
election, the World Socialist Web Site warned: “Any
illusions that Labour is a progressive party, or a ‘lesser
evil’ to National, will be shattered by the assault on the
working class that is already well underway. To repay the
debt accumulated by bailing out the rich, the re-elected
Ardern government will work with big business and the union
bureaucracy to implement drastic austerity measures. This
will inevitably trigger a resurgence of class

The prediction is being borne out in
spades. Public sector workers argued that they had carried
the burden of the COVID-19 response, and responded with fury
to the government’s announcement, denouncing it as a
“betrayal.” Prominent right-wing blogger David Farrar
meanwhile praised Labour’s move as “very bold” and
something that a National government would never have

The initial response by the trade unions was to
meekly complain that the Labour government—which they had
supported and many had funded during the election—had
failed to “consult” them. The Public Service Association
(PSA) told TV 1 they had no “heads up,” and the move
would interfere with their ongoing

Nurses, who have recently rejected a
miserly 1.3 percent pay offer from the District Health
Boards, took to social media to declare the move likely to
precipitate a vote to strike.

One senior nurse told
Radio NZ she spent last year terrified of dying from
COVID-19 or giving it to her family. “To be facing in real
terms a pay decrease… it was absolutely a slap in the face
having faced extreme risk,” she said. She had never seen
worse conditions in the past 15 years, saying they are
regularly understaffed, wards and waiting rooms are
overfull, and it is often unsafe.

The furious backlash
from workers and union members quickly forced a change of
language from the union bureaucracy. “Don’t expect us to
take this lying down,” Council of Trade Unions (CTU)
President Richard Wagstaff told the New Zealand Herald. In
an open letter to Hipkins, the PSA declared: “Your pay
restrictions at this time are unacceptable.” The Green
Party, which is part of the government, launched a petition
calling for Labour to reverse the decision.

remarks were quickly demonstrated to be hot air. Wagstaff
told Business Desk there was “nothing new with the issuing
of expectations that set a low bar for public sector worker
wage movement.” Wagstaff emphasised that wage negotiations
would continue in “good faith” and there were “some
positive aspects of the government’s expectations that we
can agree on.”

Emerging from a meeting with
ministers on May 11, the unions claimed a “victory” on
the bogus basis that the “guidance” set out by the
government will now be reviewed at the end of next year.
Meanwhile, there is “scope to discuss” cost-of-living
increases for union members covered by collective
agreements, and scheduled increases through step-based pay

In response, Hipkins bluntly told the media
that his expectations had “not changed.” The government
will continue with its brutal austerity agenda, which the
unions will continue to enforce. In 2018 and 2019, following
nationwide strikes by tens of thousands of teachers and
nurses, the New Zealand Nurses Organisation and the teacher
unions rammed through sellout agreements which did nothing
to address severe understaffing and delivered a pay increase
of just 3 percent for most workers.

Labour has
simultaneously launched an overhaul of industrial law to
empower the unions to police the broad sections of low-paid
workers who are currently not union members. The policy will
significantly boost the institutional power of unions
through centralised wage bargaining. So-called “Fair Pay
Agreements” (FPAs) will allow unions to negotiate on an
industry-wide basis. If 10 percent of a workforce, or 1,000
workers agree, a union will have power to negotiate directly
with the employer group covering a particular sector for an
agreement for all workers, union and non-union.

the CTU and BusinessNZ will receive $250,000 for the next
three years to support coordinating FPAs. Sectoral unions
can also receive $50,000 to help with the costs of
bargaining. That is, a corporatist framework of
employer-union-government wage setting will be put in place
to entrench low pay across entire industries, enforced by
draconian legislation.

The unions, as they have done
for decades, will impose the deals and suppress resistance
from workers. The government has foreshadowed banning
strikes and lockouts during FPA bargaining. Strikes are
already illegal except when employment contracts are being
re-negotiated or for health and safety reasons. These
repressive provisions, legislated by the previous Helen
Clark-led Labour government, will be expanded with the
active support of the CTU. As it imposes austerity measures,
the government is bringing forward this anti-working class
legislation to suppress a new eruption of unrest and

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