Wage rise in The Age

There is a piece in The Age today entitled “Protests mount on wage rise.” It quotes me as part of the protest but I must say that I was not protesting the wage rise — that decision seems to be economically well thought out. What I was concerned about was the overall mix of government policy:

Joshua Gans, economics professor at Melbourne Business School, said if the Federal Government was taking more than 80 per cent of the pay rise from some families, it was essentially outsourcing some of its welfare bill to employers.

“It’s giving workers about the same or a little more, but the costs of it are to come directly from their employers and not from the Government — that’s why I called it ‘a privatisation of social security’,” he said.

As I mentioned yesterday, the real concern is that the government could cut welfare and thereby put the Fair Pay Commission in the position of readjusting pay accordingly — putting the burden on employers. The FPC would be acting appropriately in the circumstances but the process would have the stamp of an overall shift in policy. To do this without explicit debate is not something one can sanction.