Private Sector Smashed By Lockdown Recession While Bureaucrats Flourish

Written by:
2 September 2020
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Private sector workers’ wages dropped $5.9 billion in the June quarter while public sector workers’ wages increased $768 million, according to an analysis of Australian Bureau of Statistics data released today by the Institute of Public Affairs.

  • In the June quarter, private sector wages were $5.9 billion lower than in the March quarter, a 3.6% decline.
  • Meanwhile, public sector wages were $768 million higher than in the March quarter, a 1.4% increase.
  • The largest decrease occurred in Queensland where private sector wages declined 4.9%.
  • The largest increase occurred in the Australian Capital Territory where public sector wages increased 6.5%.

“This is further evidence that we are living in two Australias. Those working in the public sector have been completely insulated from the economic devastation inflicted on the private sector,” said Cian Hussey, Research Fellow at the IPA.

“This recession has been solely caused by government lockdown measures which have disproportionately smashed private sector workers, while public sector workers and politicians have received pay rises.”

“It is clear that we are not all in this together. There is no concept of shared sacrifice amongst the public sector workforce.”

“Australia is experiencing a ‘K’ shaped recovery, where the public sector continues to grow and receive pay rises while the private sector languishes. This is made worse by the fact that those on the upward sloping arm of the ‘K’ make the decisions about when and how those on the downward sloping arm can return to work.”

“The lockdowns have caused a monumental redistribution of wealth and economic opportunity from the private, productive part of the economy, to the rigid, risk-averse, public sector who then impose more rules and red tape on the private sector.”

“All politicians and senior public servants earning over $150,000 a year should take an immediate 20% pay cut to share in the sacrifice made by the private sector,” said Mr Hussey.

Previous IPA research found that between 14 March and 25 July, 604,312 jobs were lost in the private sector while the public sector gained 13,989 jobs.

IPA research released in April found that 74% of Australians support a 20% pay cut for politicians and senior public servants who are paid $150,000 or more.

Note: This analysis is based on the Australian Bureau of Statistics’ Australian National Accounts: Income, Expenditure and Product, Jun 2020 cat. no. 5206 released on 2 September.

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