Transcript
The Director of the Overseas Central Bank of New Caledonia says families will not suffer a reduced standard of living with the gradual winding down of indexed salaries.
Thierry Beltrand has echoed comments last month by the visiting governor of the Bank of France, Christian Noyer, calling for more competition and lower public sector wages to help fight the high cost of living in New Caledonia.
A one-year price freeze has come into effect for a range of products and services, in response to May's 12-day general strike, which was called to protest against the cost of living.
Mr Beltrand told Johnny Blades that the reduction of indexation of public service salaries, which are almost double those in mainland France, is imperative.
THIERRY BELTRAND: If the private sector wants to attract good managers or people, they have to pay high salaries. That's why all salaries are high now because you can't have so many different... If not, all people would like to go to administration and nobody [into] the private sector. That's why even the private sector proposes high salaries.
JOHNNY BLADES: So you think this process will proceed not without resistance, I suppose?
TB: Yes, with resistance because everybody is conscious that the good thing would be what the governor says, that salaries and costs will lower. But the principle is when your salary lowers and your prices you always keep your level of life. You don't ever say 'Just cut the indexation and the prices stay here'. No. You do it always, so as the prices lower you always can have the same, okay? So everybody must agree with this because nobody loses anything with this. But that's a very long-term process. Many people want to keep this indexation and earn a lot here, save a lot.
JB: Is that assuming that they will return to France one day?
TB: Yes, normally.
JB: Because surely it's all relative, isn't it? if the indexation goes, then the other things will gradually come down and they're not really losing out. Like housing will come down and stuff like that.
TB: Well, what was decided one month ago - blocking prices to lower the prices from 10% - you can do it a short time. But for a long time, if you really want to lower the prices you have no solution [other] than lowering the salaries, and to be competitive. Of course, what makes the salaries so high is indexation.
