The Government is softening its commitment to freezing the wages of most public sector workers who earn more than $60,000 a year.
Following a meeting with unions on Tuesday, Minister for the Public Service Chris Hipkins agreed to review the new Public Service Pay Guidance in late-2022, rather than in mid-2023, as previously decided.
While the unions were pleased, Hipkins downplayed the change, saying: “We’re in unusual and unpredictable times, and we’ve agreed to bring the review forward by a few months.
"It’s worth taking stock at the end of 2022 to see whether the situation has changed sufficiently to revise the guidance."
Hipkins stressed: “The expectations we set out last week have not changed.”
When asked by National MP Mark Mitchell, during question time in parliament on Tuesday, whether he would consider "backing down, changing or amending" his decision around pay restrains, Hipkins said no (see video below).
Unions claim a small victory
However, the unions are of the view Hipkins has backed down a little.
The Public Service Association (PSA) said the Government agreed there was “scope to discuss” raising the wages of “all” union members covered by collective agreements in line with increases in living costs.
But Hipkins said: “Cost of living increases are in scope to be discussed during negotiations, as they always were.”
The PSA also said: "There was agreement today that more workers should receive scheduled increases through step-based pay systems. Negotiations enable these pay systems to be implemented.
"The possibility of a multi-employer collective agreement for the public service was discussed. The PSA strongly supports this as a way to align pay and conditions consistently, efficiently and fairly."
Council of Trade Unions (CTU) president Richard Wagstaff added: "There was absolute agreement that bargaining will be in good faith without pre-determined outcomes…
"We made it crystal clear how unhappy and angry union members are feeling in response to the policy announcement.”
Govt says the pay freeze will reduce inequality
Hipkins said, “Both sides were happy to clear up that this isn’t - and never was - a “pay freeze", and there would be a focus on lower paid workers.
“We are committed to accelerating pay equity and parity processes and prioritising wellbeing and workload issues.”
The Government has pitched the pay freeze as a move to reduce inequality and reflect responsible management of the Government's finances.
However, it's been unable to put a figure on how much the freeze is expected to reduce the cost of wages by, saying this depends on future bargaining settlements.
Green Party MP Jan Logie on Tuesday asked Hipkins to explain exactly how the pay freeze would reduce inequality (see video above).
Hipkins responded: "What the Government is saying is if we continue to provide across-the-board pay increases that see the majority of the money going to people on the highest salaries, the inequality in the public sector will continue to increase, and that is not something that this Government wants to see continue."
Exactly what the Public Sector Pay Guidance says
The Public Service Pay Guidance stipulates those who earn less than $60,000 should be given “modest” pay increases.
Meanwhile the “default position is that there should be no increases to bands” for those on between $60,000 and $100,000. Pay adjustments “may be considered” if the following criteria is met:
- modest progression within a band; or
- demonstrable recruitment pressures that cannot be addressed solely through modest progression increases; or
- the increase is related to the introduction of a remuneration system consistent with this guidance; and
- whatever increase is proposed is comparatively less than those for low paid staff (less than $60,000).
As for those who earn more than $100,000, the guidance says, “the default position is that there are to be no increases to bands and no pay adjustments”.
“In exceptional circumstances agencies may seek agreement of Te Kawa Mataaho [Public Service Commission] to proposals that are outside the default position.”