PSA wants 5% also

The PSA wants a 5% pay rise for its members, along with other unions. I wonder if they have calculated how the Government’s economic policies will affect any pay increases.

You see the effective marginal tax rate for workers earning between $40,000 and $70,000 is around 89% if you have a couple of kids.

So a PSA member with kids on $50,000 in theory would get $2,500 more if the PSA claim is accepted, but after tax and abatements it would reduce to $275, or a mere $5.30/week – less than the PSA membership fee.

Now the Government is over-taxing NZers by around 15%. If they dropped your tax by 15%, then said worker on $50,000 would get to keep $1,740 more income as compared to the $275 the PSA would get them.

I also note the PSA wants an end to performance-based pay. I’m sorry, but exactly what breed of dinosaur does the PSA wish to be classified as?

UPDATE: Heh looks like John Key, or one of his helpers, reads my blog. He has a press release on the issue here.

UPDATE2: Question 10 in the House today was on this issue. The Government did not deny the accuracy that 90% of any pay rise could be lost in tax and abatements.

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