Public service pay freeze thaws as new guidance issued

The Public Service Commission has eased pay restraint advice, thawing the so-called 'pay freeze' that was meant to stop public servants earning over $100,000 from getting increases.

Guidance issued to agencies amid the COVID-19 pandemic asked for high-earning public servants to not receive pay increases, except in exceptional circumstances. However, new advice released on Tuesday doesn't include such specific guidance.

Instead, the Public Service Commission lays out a number of key principles for public service pay, including that pay strategies "should help the agency to address recruitment and retention issues demonstrably impacting service delivery". 

"That can include frontline staff, direct support to frontline services or subject matter expertise where there is a limited supply of that expertise."

The guidance said agencies are "encouraged to apply targeted increases to the various parts of their workforces, informed by a range of evidence sources (one form of evidence may be public/private market indicators)".

The public service's remuneration approach should recognise "the current environment is one of pressure on wages in all parts of the economy, and where the public service is facing shortages in key areas for staff" as well as the impact of the Public Service Pay Adjustment (PSPA). 

"The PSPA aims to provide certainty to public service staff, including in the current high inflation environment and to create a constructive industrial environment. It also seeks a consistent and concurrent approach to employment relations within the public sector."

The guidance is also meant to recognise "the Government’s ambitions to prioritise low-paid roles in any pay settlements" and build on and accelerate "gains made to date in reducing gender and ethnic pay gaps".

Any pay adjustments required by law or to comply with contractual obligations must be met and there should be a minimum pay rate for staff that provides a liveable wage.

The Public Service Commission said it wants to ensure the public service "can attract talented and skilled staff to work in the public service and that we are able to reward work fairly". 

"It is also important that public service pay takes into account the impact on taxpayers and the Government’s fiscal situation. As in previous years, agencies may wish to offer increases that sit outside this guidance where there are exceptional circumstances."

There should be "careful judgement" about any "exceptional" adjustments to pay. This should take "into account factors such as the significance of the increase, the quality and relevance of the supporting evidence, and how closely aligned the proposal is to the intent of the guidance and the Government’s expectations for employment relations".

In a statement, Public Service Minister Andrew Little said previous guidance "had a greater emphasis on pay restraint, especially for higher paid roles, and was fit for purpose in response to COVID".

“The pay guidance update recognises the current cost of living pressures being felt across the country and the economy."

He said he believed this approach "strikes the right balance in difficult times".

Little said more than a dozen collective agreements are now settled in "the public service, Crown Agents, and education sectors in line with the agreed PSPA with more underway".

PSPA potentially affects more than 150 collective agreements in the Public Service, Crown agents, Te Whatu Ora - Health New Zealand, state and state-integrated schools, registered kindergarten teachers in free kindergartens, New Zealand Police, and the New Zealand Defence Force.

“A significant number of public sector workers are likely to enter negotiations over the coming year, and so following a proposal by the New Zealand Council of Trade Unions (NZCTU), the Government agreed to look into a pay adjustment for all workers at the same time.

“Under the agreed terms of the PSPA workers would receive lump-sum payments of $4000 in year one, and either $2000 or 3-percent of their annual income in year two.

“This is an attempt to give public sector workers an affordable increase that balances the current economic environment and cost of living pressures."

National public services spokesperson Simeon Brown said the pay freeze had "failed".

"Labour's pay freeze was a freeze in name only with thousands of highly paid core public servants receiving pay increases despite this guidance.

"Ensuring public servants can deal with the cost of living crisis that Labour helped create is important, however New Zealanders also want a Public Service which is delivering results for kiwis.

"National will ensure our Public Service is delivering better outcomes for New Zealanders through clear outcome measures so that Kiwis get the public services they need and deserve."

Newshub revealed earlier this year that despite pay increases banned for public servants making more than $100,000, some had. 

Last year, from April to November, 427 high-paid public servants got a pay rise. They included 89 Ministry of Social Development staff, 51 Energy Efficiency and Conservation Authority staff and, 42 Inland Revenue Staff.