NSW public servants wage increases slashed in $3 billion cost cutting effort

By Matthew Elmas

Friday October 2, 2020

public servants
NSW Treasurer Dominic Perrottet (AAP Image/Dean Lewins)

About 170,000 NSW public servants will have their nominal wage growth cut to 0.3% over the next 12 months after the state’s industrial relations commission balked at union calls to maintain longstanding annual increases.

In a decision handed down on Thursday afternoon, NSW’s industrial umpire brought an end to nine consecutive years of 2.5% wage increases for public sector workers across the state, including nurses and teachers.

Crucially, there are no guarantees the historical increases will be restored next year, with comments from the commission suggesting public servants have no entitlement to a specific level of pay rise.

The decision, which will save the state government about $3 billion, has been welcomed by Treasurer Dominic Perrottet and condemned by unions amid heated disagreement about whether public servants should retain real wage increases during the COVID-19 pandemic.

While the 0.3% nominal increase would translate to real wage growth over the twelve months to June, torrid economic conditions have generated additional uncertainty around inflation increases, with arguments before the commission suggesting a 0.3% decline in real wages could occur over the two years to June 30, 2021.

Unions had sought to lock in annual 2.5% increases over the next three years, while the Berejiklian government had pushed for a wage freeze through NSW Parliament back in May, a bid that was knocked back by cross bench members.

Perrottet said freed up funds have already been committed to an infrastructure and job acceleration fund to help the state claw its way out of the COVID-19 recession.

“This decision is a win for the thousands of people in NSW who have had the security of a job ripped away by a global pandemic, and who are relying on our government to help them get back into the workforce,” Perrottet said in a statement.

“For the last nine years, public servants in NSW have received the maximum pay rise of 2.5% but in these circumstances where nearly 90% of NSW workers are in the private sector, many of whom have lost a job or been stood down, the Government needs to focus squarely on rebuilding the economy.”

But Unions NSW argued the money would better stimulate the economy in the pockets of public sector workers and is now threatening further industrial action.

“Because workers are seen as an easy target – they don’t have the wealth or power of big business, CEOs or the banks that should be forced to pay their fair share of tax,” Unions NSW said in a statement.

“What’s worse, the Premier has already awarded pay rises to Government CEOs and Heads of Departments – she [Berejiklian] even gave a $17,000 pay rise to her Finance Minister.”

Explaining its decision, the full bench of the industrial relations commission rejected union arguments that the burden of proof for a cut should fall on the government.

“There is no presumptive outcome in respect of the applications. The employees do not come into these proceedings with an entitlement to a particular wage increase,” the commission found.

“The onus is on the Applicants [unions] to rebut the presumption that awards of the Commission set fair and reasonable terms and conditions of employment; that is, to make out the case for change to, or replacement of, the relevant awards.”

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