28 Jun 2013

Salaries under spotlight in New Caledonia's economic struggles

4:57 pm on 28 June 2013

There are concerns in New Caledonia that a price freeze following industrial action is merely a short-term fix.

A one-year price freeze has come into effect for a range of products and services, in response to a last month's 12-day general strike called to protest against the cost of living.

Johnny Blades reports:

The rocketing development of the nickel mining industry and associated construction spared New Caledonia from the global economic crisis until recent times. But the vice-secretary of the territory's FO Trade Union, Sylvain Meallet, says many ordinary people are now feeling the pinch.

"SYLVAIN MEALLET: And now the buildings are finished and the plants are not really running and so we have a lot of people who have lost their job now because it was short-time contracts for two or three years. Now we feel a lot of crazy sentiment because these people have not much income each month, it's something like a local crisis. But it's really a special atmosphere and there's a lot of demonstration because of this... I think it's a fear from many people - they don't know what tomorrow is made with."

The economic difficulties are related to the fact that under the indexation system, public servants are paid salaries almost double those in mainland France. Mr Meallet says those involved in the recent strike ended up agreeing to measures which gave up considerable ground on what FO and other unions demanded in the massive strikes of 2011.

SYLVAIN MEALLET: It's not enough. What we were really waiting for was more efficient control on benefits. And if salaries could be higher, there's no problem of cost of living - it's just a matter of salary. I think the struggle for workers is we have not much influence on prices but you can have influence on the salaries.

This is echoed by the territorial government's secretary of Labour, Georges Mandaoue:

GEORGES MANDAOUE (THROUGH TRANSLATOR): That's why there's a problem. That's what the unions should fight about. It's to raise wages up but they didn't ask for wages to be raised. They only concentrated on the food prices to have them lowered, and that's all.

The governor of the Bank of France, Christian Noyer, visited the territory recently, calling for more competition and lower public sector wages to help fight the high cost of living. The Director of the Overseas Central Bank of New Caledonia, Thierry Beltrand, says public servants will not suffer a reduced standard of living with the gradual winding down of indexed salaries.

CHRISTIAN NOYER: Salaries must lower and costs will lower but you always keep your level of life. He never said, 'Just cut the indexation and the prices stay here'. No. Everybody must agree with this. But it's a very long-term process.

The arrangement to end the recent strike also provides for a tax reform by mid-2014. Georges Mandaoue says the current tax set-up mainly benefits the rich; and that too much revenue flows untaxed out of New Caledonia for companies involved in major mining developments, as well as insurance and banking sectors. He also says the government is already trying to raise the wages in the private sector by making companies redistribute profit in workers' salaries.