Workers will ‘expect’ salary hikes

Pay settlements in New Zealand’s public sector could trigger demands across labour market, warn experts

New Zealand workers are likely to expect bigger wage increases after pay settlements for health workers, and teachers and nurses push very publicly for higher wages.

Salary increases over the past year have remained reasonably stable at 2.2 per cent, according to data from remuneration consultants Strategic Pay.

But staff are likely to be discontent with increases of that level this year after Government settlements with care workers, and public campaigns around nurses’ and teachers’ pay lift expectations across the rest of the labour market.

“A lot of employees are thinking about what’s going on elsewhere and saying ‘perhaps I deserve more the 1.2 per cent or whatever I’ve been receiving’,” said Strategic Pay chief executive John McGill.

“A lot of organisations haven’t budgeted for large increases.”

Nurses this week voted in favour of the latest pay offer from the Government, staving off further strike action and bringing nearly a year of negotiations to an end.

The new offer, involving three pay increases of 3 per cent, is expected to be worth $520 million.

And a teachers’ strike is looming with the union that represents primary school workers asking for a 16 per cent pay rise over two years.

The Government last year announced a historic $2 billion pay equity settlement covering 55,000 care workers in the aged residential care, home support and disability service sectors. Last month Health Minister David Clark signed a $173.5m pay equity settlement for mental health and addiction support workers, bringing around 5000 staff remuneration levels into line with care and support workers. Those settlements have seen a pay bump of up to 20 per cent for those directly affected by the residential care workers agreement, Strategic Pay’s not-for profit remuneration survey shows. This level of increase is unprecedented in recent years and will likely affect the expectations of other workers in the months ahead.

McGill said the deals would boost wages across the not-for-profit sector. “With Government already saying ‘there’s no more money’, NFPs could be left scrambling to find the additional funds they need or implement other strategies to mitigate the shortfall — such as reducing the number of supervisory roles, reducing hours of work, or simply having to accept greater levels of pay compression across the board.”

Max Robins, CHT Healthcare Trust chief executive, said they were seeing twice the number of caregivers on the highest level of the pay scale compared with last year.

“The pay equity legislation has undoubtedly had some unanticipated consequences, particularly thanks to its recognition of a far broader range of qualifications than those envisaged by employers during negotiations,” Robins said.