Outrage at 3-year pay freeze

Health workers and unions have reacted with outrage after the Government announced a threeyear pay freeze for many public servants.

Public Service Minister Chris Hipkins revealed yesterday that public servants earning more than $60,000 will only be offered pay increases under select circumstances for the next three years.

There will be no pay increases for those earning more than $100,000 or senior leaders, while those earning less than $60,000 – about a quarter of the sector – will still see pay increases.

Finance Minister Grant Robertson said the restraint was necessary to keep a lid on public debt, which had rocketed during the Covid-19 pandemic to pay for expensive measures such as the wage subsidy.

The main public sector union, the Public Service Association (PSA), slammed the move as ‘‘unacceptable’’.

‘‘In our hospitals, in testing labs and on our borders, PSA members did the hard work required to push Covid-19 out of this country,’’ PSA national secretary Kerry Davies said. ‘‘It is unacceptable that after 12 months of pay restriction these workers are told to swallow it for another three years.

‘‘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.’’

The median salary for a PSA member is $59,000, and 80 per cent earn less than $75,000 annually.

The Association of Salaried Medical Specialists Toi Mata Hauora said the freeze was a “kick in the teeth” for health workers and sent the message that they were not valued.

“On one hand the Government has been showering doctors and medical professionals with bouquets for their response to Covid, and on the other it turns around and swings a very heavy brickbat. It doesn’t make sense,’’

‘‘It seems like governments always find an excuse to undervalue public servants and restrict their pay.’’

Kerry Davies Public Service Association national secretary

executive director Sarah Dalton said. In real terms, the pay freeze meant salaries would go backwards by about 2 per cent a year, she said.

Now that the trans-Tasman bubble is open, the estimated 60 per cent pay gap might entice highly trained specialists across the ditch. ‘‘I think we all know that as a country we can’t afford for that to happen,’’ Dalton said.

The move could worsen Aotearoa’s most critical health shortages – for example radiation therapists, physicists, perfusionists, psychologists and laboratory scientists, according to the Association of Professional and Executive Employees (Apex), the union that represents them.

It would be hard to resist ‘‘constantly increasing remuneration’’ in the private sector, and people who leave are all but irreplaceable in the current environment, Apex national secretary Dr Deborah Powell said.

National’s police spokesman, Mark Mitchell, said the pay freeze would unfairly hurt teachers, nurses and cops.

‘‘Our teachers, nurses and police officers worked tirelessly during the pandemic to keep us safe, to keep us healthy and to continue educating our children,’’ Mitchell said.

‘‘It’s totally unacceptable that the Government has now signalled that their pay will be frozen for three years, and it has had an immediate impact on pay negotiations for our police officers.’’

Police Association president Chris Cahill said the police union ‘‘absolutely rejected’’ the ‘‘bombshell’’ policy.

‘‘Such an order is actually consigning workers to pay cuts in real terms.’’

Cahill said the announcement ‘‘in no way demonstrates the ability of a government to bargain in good faith’’.

‘‘It ignores the reality of the current economic times that loyal Kiwi workers are facing as they, in their private lives, grapple with record house prices and outof-control rents. Inflation is also on the up, with financial experts widely expecting inflation growth in the coming months, let alone the three years of this freeze.’’

Hipkins said he wanted those on lower wages to be the focus of any increases in pay. ‘‘This is about prioritising spending. This will also help protect jobs by taking financial pressure off the public wage bill.’’

He said it would not affect the work being done to close gender and ethnic pay gaps. The pay freeze move extends a measure brought in last year that was set to expire next month.

It is technically ‘‘guidance’’ but the core public sector must take heed of it, although exceptions could be made in exceptional circumstances. A review of the rules will take place in mid-2023, so there is a chance that the freeze will lift early – though the intent of the Government is that it will last three years.

Those earning between $60,000 and

$100,000 will only be eligible for a pay rise if there is serious recruitment pressure in their area.

Robertson was unable to say how much money would actually be saved from the changes, but it is likely to be minimal in the context of wider government spending, as the pay bill total is about $5 billion of a

$108b budget.

He said it was important to ‘‘show leadership’’, however. The more autonomous entities such as police, the defence force and public media companies have slightly more leeway – they must ‘‘have regard to’’ the pay freeze, while the rest of the public sector ‘‘must give effect to’’ the changes.

The ministers said they had not made allowances for normal inflationary pressure and living-cost increases because public-sector pay had outpaced inflation and private-sector pay before Covid-19.