The NSW government looks like it has cleared the way for public service wages to rise by up to 3% in the next two years, and perhaps a bit more, after a surprise announcement on Monday.
The new two-year wages policy will give public sector workers a 3% increase a year in 2022-23 and 2023-24, with a possible further 0.5% in 2023-24 for “employees that make a substantial contribution to productivity enhancing reforms”.
Subpar wages growth is widely seen as one of the headaches for the economy – especially now with inflation on the rise and interest rates, especially on home loans following (we get another rate rise today from the Reserve Bank).
The previous cap in NSW has been 2.5% from when the coalition came to power in 2011.
The decision is likely to see other state governments follow NSW in some fashion and try and lift state employee wages by 3%.
Seeing all other governments bar Tasmania, are now ALP-dominated, a concerted national increase is very much on the cards.
The key decision will be the federal government – the country’s biggest employer. The Morrison government changed its cap and linked public service pay to increases in the Wage Price Index for private sector workers. Private sector wages have mostly moved higher at a slower rate than public service wages.
Besides the 3% increase, the NSW government will also give thousands of health workers a one-off $3,000 thank you payment, in recognition for their work during the pandemic. This includes all permanent NSW Health staff, including paramedics, midwives and cleaners.
The government has been under intense pressure from unions representing nurses, paramedics and teachers to lift the wages cap from 2.5%.
It will, however, limit executive remuneration to 2% in the next year.
NSW Premier Dominic Perrottet said the changes to the government’s wages policy was “fair and reasonable”, although acknowledged that union leaders could have a different view.
The new federal government has already written to the Fair Work Commission supporting a 5.1% pay rise for the lowest paid workers and those at the bottom end of industrial award pay scales – around 2.3 million people.
The 3% or perhaps 3.5% increase will still see real wage growth go backwards for NSW government employees with inflation currently at a headline 5.1% and forecast to top 6% later this year after the current sharp increases in electricity and gas prices as well as more upward pressure on petrol prices (and the expected ending of the 22 cents a litre excise cut in September).
The Fair Work Commission will rule rate this month on a wage rise for the nation’s lowest-paid workers.
