NZ public service agencies told to give pay rises to lower-paid staff only

By Shannon Jenkins

Wednesday May 5, 2021

Chris Hipkins
Chris Hipkins. (AP Photo/Nick Perry)

Only one-quarter of public servants in New Zealand will be eligible for modest pay increases over the next three years, according to public service minister Chris Hipkins.

Last year public service commissioner Peter Hughes initiated a pay freeze across the government until June 2021, in response to the economic impacts of COVID-19.

In updated guidance, announced by Hipkins on Tuesday, agencies have been directed to only grant pay increases to those earning below $60,000, and to use restraint. Those lower-paid employees account for about 25% of the public sector.

“The updated guidance will continue to mean no pay increases for those earning over $100,000 and senior leaders within the public service,” he said.

“We want to see those on lower wages be the focus of any increases in pay. This is about prioritising spending. The policy will also help protect jobs by taking financial pressure off the public wage bill.”

The guidance has been extended for a further three years.

Finance minister Grant Roberson said COVID-19 response measures like the wage subsidy, while successful, had increased NZ’s debt.

“As the recovery gets underway, we are keeping a close watch on the debt taken on during COVID-19 to support the economy. Just as businesses are making decisions as they plan for the recovery, our responsible economic approach means the government is faced with choices about where new spending is targeted,” he said.

The union representing NZ public servants said the pay restrictions would be a “tough pill to swallow” for the government employees who supported business owners and workers during and following lockdowns.

“The government can tell employers not to offer pay increases, but it doesn’t seem able to limit increases in the cost of living. Public servants are more likely to rent than most New Zealanders, and both rents and house prices continue to skyrocket up,” Public Service Association national secretary Kerry Davies said.

“It seems like governments always find an excuse to undervalue public servants and restrict their pay, whether it’s COVID-19, the Global Financial Crisis or the Great Depression. It’s unfair and it’s bad economics. Social workers and DOC rangers don’t put pay rises into offshore accounts, they spend it at local businesses and support our economy. Reduced consumer spending will help no one.”

The median salary for a PSA member is $59,000 a year, and 80% of members earn less than $75,000.

READ MORE: NZ public service heads take 20% pay cut


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