Would you cap your wages for the sake of the economy?

Ask not what your economy can do for you, but what you can do for your economy.

Prime Minister Rudd has backed a pay freeze for all federal politicians and asked chief executives to do the same to help reduce wages pressure on inflation.

The move has been described as a political stunt by the Opposition and it came on the same day that the Treasurer introduced into Parliament the legislation to give Australians $31 billion in tax cuts over three years from 1 July 2008.

There are rising expectations of an additional interest rate rise as the unemployment rate fell to a 30-year low of 4.1% in figures released yesterday.

The market is reportedly forecasting a 70% chance of two more rate rises from the RBA on top of last week’s increase.

The Prime Minister also pointed out that he did not expect ordinary wage earners to accept lower pay. “Working families are already under financial pressure,” he told Parliament.

“In the difficult challenges we face ahead this year on the economy and inflation, I would hope that those in the most privileged positions in the corporate sector also reflect carefully for CEO wage restraint in the year ahead.”

While Rudd is not specifically asking entrepreneurs to make sacrifices, would you? Is it fair to ask in a market economy? Or is it just a stunt?

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