Private sector generated economic stimulus

In Australia, companies such as AMP, Qantas, Santos and Stockland are implementing wage freezes as a result of the current financial crisis and economic downturn. Unfortunately the cumulative effect of wage freezes by companies could deepen the recession by countering government stimulus policies and ultimately force companies to lay off staff, the exact opposite of the intended effect. It's a self defeating policy at the macro level for companies to follow.

While it may make sense for Visy, Macquarrie Group, Virgin Blue and Holden to cut back excessive top level executive remuneration, across the board pay freezes for salaried employees with modest remuneration levels in a relatively lean and profitable company makes less sense.

It may make more sense for companies that can afford it to maintain wage growth where possible, and publicly champion the we are all in this together message by encouraging other companies to maintain wages in order to help turn the economy around as quickly as possible.

There are companies actively supporting government policy to turn the economy around. One such company is Bollinger Insurance, as reported this weekend on Fox.

The policy of the major banks in Australia announced on the weekend to defer mortgage payments for the unemployed for a year is in the same spirit of support for government policy to stimulate the economy and get it moving again.