Three-year pay freeze For public servants

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

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. The move extends a measure brought in last year, 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 freeze lifts early – although the intent of the Government is that it will last three years.

Finance Minister Grant Robertson

said the restraint was necessary to keep a lid on public debt, which had skyrocketed during Covid-19 to pay for expensive measures like the wage subsidy.

‘‘As the recovery gets under way, we are keeping a close watch on the debt taken on during Covid to support the economy,’’ Robertson said.

‘‘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.’’

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 ‘‘show leadership’’ however.

The guidance applies across to

the public sector, from ministries to DHBs, through to independent agencies like the police.

But 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 livingcost increases because prior to

Covid-19, public sector pay had outpaced inflation and private sector pay. The main public sector union, the Public Service Association (PSA) slammed the move as ‘‘unacceptable’’.

‘‘New Zealanders trust our public servants more than ever before, and with good reason. They are the least corrupt and most resilient government workforce on the planet,’’ said PSA national secretary Kerry Davies.

‘‘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.

‘‘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.’’

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

Kerry Davies

PSA national secretary