Government hits restart over public sector pay

The Government has softened its stance on restraining public sector pay following two meetings with furious unions.

It will now review the policy a year earlier and will consider costof-living increases for public servants on moderate incomes.

Public Services Minister Chris Hipkins said this was not a backdown and the Government had always been happy to discuss cost-of-living increases.

But this doesn’t match his statement last week that public servants earning between $60,000 and $100,000 could only expect pay increases in ‘‘special circumstances’’ with the permission of the Public Service Commission.

Senior ministers have been blaming the media for the anger from the public sector over the pay restraint announced last week, when they indicated that no public servant earning over $100,000 could expect a pay rise for the next three years, and those earning between $60,000 and $100,000 would only get them in special circumstances.

Hipkins and Prime Minister Jacinda Ardern first disputed that the pay restraint was a ‘‘freeze’’ because those on collective agreements with increases already built-in would still see their salary increase. It was never suggested that the Government would not honour its existing contracts.

Following the meetings with the unions both sides told media that the restraint was not in fact a ‘‘freeze’’, but just an opening position for collective bargaining negotiations, which would be entered into in good faith.

Council of Trade Unions President Richard Wagstaff said there was now room for cost-of-living increases in those discussions. ‘‘It was also agreed that there is scope to discuss cost of living increases in negotiations for all union members covered by collectives,

with higher increases for low paid workers and that there is no pay freeze.’’

Hipkins confirmed this, but said this had always been the case. ‘‘Cost of living increases are in scope to be discussed during negotiations, as they always were.’’

This is despite Hipkins saying clearly last Wednesday that pay increases for those earning between $60,000 and $100,000 would only be considered under ‘‘special circumstances’’ – something Finance Minister Grant Roberston called an ‘‘exceptions regime.’’

‘‘Any pay increase over the next three years will be targeted to low-income public servants, that’s those earning less than $60,000 per year,’’ Hipkins said at the time. ‘‘For those in between [$60,000 and $100,000,] pay adjustments will be considered in special circumstances, but they will need to work through the Public Service Commission.’’

Hipkins was also asked directly about the cost of living going up over the three years of the policy, and responded by noting that public sector pay had outpaced private sector pay in recent years. ‘‘One of the things that we have also considered in issuing this guidance is that there was significant public sector wage movement in the period leading up to Covid-19, as well.’’

Yesterday, Hipkins also confirmed that the planned review of the policy would take place at the end of 2022, instead of in mid-2023 as originally planned.

‘‘Cost of living increases are in scope to be discussed during negotiations, as they always were.’’ Chris Hipkins

Public Services Minister