STEVEN FRIEDMAN: Wage cut masquerade will end badly — again
The government has acted tough before to impress the markets … and the unions pushed back
The only credible reading of last week’s budget is that the government believes a public-sector strike will boost its credibility in the marketplace. But when governments get tough with unions to impress the markets, things tend to end badly. There is no reason to believe they will end better now.
Whether finance minister Tito Mboweni did discuss cutting public-sector wages with the unions before the speech (he says he did, they say he didn’t) hardly matters. Anyone who knows how bargaining works will know that announcing a huge cut in the wage bill before the unions agree will force them to say no. If the government wanted union agreement, it needed to have reached agreement with unions before the budget announcement...