Finsec, the finance workers' union
11 November 2005
Bank workers seek meeting with Cullen to rein in inflation
Finsec, the finance workers’ union, is seeking to meet with the Finance Minister, Dr Cullen, to discuss concerns its members hold that banks’ customer debt targets are helping to fuel inflation. The government has signaled its concern at the effect bank lending is having on inflation and is currently seeking advice from Treasury and the Reserve Bank.
Finsec believes that one of the pressures on interest rates is banks such as Westpac using performance pay targets to compel their staff to sell higher and higher levels of debt to customers. Those targets reward bank employees who sell mortgages, credit cards and other forms of lending at a much higher levels than the rewards for savings products.
The banks consistently raise the targets on their employees as they seek to take market share off each other. This means that a customer who walks into Westpac will be meeting staff who will be under pressure from their employer to encourage them into debt. The economic effect of such large growth in consumer debt is inflationary pressure.
Finsec believes that these customer debt targets have now reached crisis point.
“The Minister is obviously rightly concerned about inflation and he’s got a range of issues to consider. We think that one of those things he needs to consider is the pay systems within banks, which contribute to distorting the market and can affect inflation. Pay systems in Westpac and BNZ are not only unfair on workers, but they are hurting the economy.” Said Finsec General Secretary, Andrew Casidy.
“We’re concerned that as these targets keep growing they will end up forcing bank workers to respond to customers in ways that they are not happy with, and that the customer does not want. The undue focus on sales rather than customer service and safety is risky and unhealthy.” Said Mr Casidy.