New Zealand lifts public service pay freeze

By on 05/04/2023 | Updated on 05/04/2023

New Zealand has lifted COVID-era pay restraints on high-earning public servants in a bid to attract talent and improve retention.

In 2020, the Public Service Commission imposed a hold on wage increases for public servants who earned more than NZ$100,000 (US$63,000).

The statement on freezing pay for high earners is not present in the Commission’s latest guidance, which was released last week. Instead, agencies are advised to adopt a remuneration approach that “recognises 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”.

The Commission said it wants the public service to be able to attract talented and skilled staff who will be rewarded fairly and that the pay strategies laid out in its guidance should help agencies “to address recruitment and retention issues demonstrably impacting service delivery”. It said this could include “frontline staff, direct support to frontline services or subject matter expertise where there is a limited supply of that expertise”.

It also asked departmental leaders to “ensure a minimum pay rate for staff that provides a liveable wage” in the face of the cost-of-living crisis.

While it said it was important for the public service to take into account the impact on taxpayers and the government’s fiscal situation, it added that, as in previous years, “agencies may wish to offer increases that sit outside this guidance where there are exceptional circumstances”.

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

Public sector pay adjustments

Minister for the public service, Andrew Little, said: “Previous guidance in 2020 had a greater emphasis on pay restraint, especially for higher paid roles, and was fit for purpose in response to COVID.”

Little also said the government welcomed progress on public sector pay adjustment (PSPA) agreements, under which workers would receive payments of NZ$4,000 (US$2,500) in year one and either NZ$2,000 (US$1,300) or 3% of their annual income in year two.

PSPA potentially affects more than 150 collective agreements across the public service, Crown agents, Health New Zealand, some schools and kindergartens, and the Defence Force.

Little said more than a dozen collective agreements had been settled, with more underway, and that with a significant number of public servants likely to enter negotiations over the coming year, the government had decided “to look into a pay adjustment for all workers at the same time”.

The agreed terms were “an attempt to give public sector workers an affordable increase that balances the current economic environment and cost of living pressures,” he said. “I am confident this approach strikes the right balance in difficult times.”

Governments face strike action over pay

Governments in countries including Australia, Canada and the UK are under pressure to increase pay offers for civil and public servants, as unions work to secure rewards that take into account the high rate of inflation.

Thousands of workers at state level in Australia have taken industrial action in recent months, including public servants in New South Wales in response to a proposed 3% pay rise, which was below Australia’s then 7.8% inflation rate.

In the UK, strike action by civil servants in three government departments took place in December, followed by a walk out by more than 100,000 officials on 1 February. More industrial action is planned this month, culminating in a strike by more than 130,000 civil servants on 28 April.

The Public and Commercial Services union (PCS) is pushing for a 10% pay rise – far more than the 2% pay increase cap imposed by the government. 

The UK Civil Service People Survey 2022 – the results of which were released by the Cabinet Office last week – showed that only a quarter (26.7%) of officials believe their pay adequately reflects their performance. This is the lowest score in 14 years.

In Canada, the Public Interest Commission recommended in February that federal employees get a 9% wage increase over three years.

The Public Service Alliance of Canada (PSAC) is currently balloting its members on strike action, after the government offered an average 1.7% a year wage increase from 2021 to 2025. PSAC national president Chris Alyward described the offer as “insulting”.

He accused the Treasury Board of Canada of “total disrespect and disregard” for public servants, who he said were facing a “big pay cut” in the face of the cost-of-living crisis, as well as reduced job security and leave provisions. The ballot will end on 19 April.

Read more: Canadian officials set for ballot as governments grapple with strikes (

About Mia Hunt

Mia is a journalist and editor with a background in covering commercial property, having been market reports and supplements editor at trade title Property Week and deputy editor of Shopping Centre magazine, now known as Retail Destination. She has also undertaken freelance work for several publications including the preview magazine of international trade show, MAPIC, and TES Global (formerly the Times Educational Supplement) and has produced a white paper on energy efficiency in business for E.ON. Between 2014 and 2016, she was a member of the Revo Customer Experience Committee and an ACE Awards judge. Mia graduated from Kingston University with a first-class degree in journalism and was part of the team that produced The River newspaper, which won Publication of the Year at the Guardian Student Media Awards in 2010.

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