Unions push back after NSW Government announces public sector wage cap increase
After a series of long-running disputes with public service unions, the NSW Government announced on Monday 6 June that it will increase the long-standing 2.5 per cent wage cap on public sector wages to 3 per cent over the next two financial years. A further 0.5 per cent will become available in 2023-24 for employees who contribute to productivity-enhancing reforms.
The NSW Government also announced a one-off 'thank-you' payment of $3,000 for NSW Health Workers, recognising their efforts during the COVID-19 pandemic. The new wages policy aims to support productivity reforms and the modernisation of the public service.
The announcement comes off the back of a series of strikes and other industrial action from teachers, train drivers, nurses and paramedics. As recently as this week, the unions representing the public sector have threatened widespread industrial action in order to raise wages. The wages cap, first introduced in NSW in 2011, has received widespread criticism from unions. While unions acknowledge the proposed increase, they assert it is not enough to alleviate the rising cost of living and does not translate to a substantive growth in real wages. The unions continue to press for the cap to be removed altogether, or at minimum, raised to 5.1 per cent mirroring the inflation rate.
Although the government hopes the increase will promote workforce stability, the unions have already announced plans for further industrial action, with members of the NSW Public Service Association having gone on strike on Wednesday 8 June. The rise in interest rates announced by the Reserve Bank of Australia this week will also apply further pressure for change.
In 2019, the Reserve Bank governor, Phillip Lowe, pointed out that fixed wage caps on public sector wages have a wider impact by entrenching wage stagnation across other sectors. Further, unions suggest that the new public sector increase in NSW acts as a benchmark for private sector employers and can stall momentum for wage growth in the private sector.
It is yet to be seen how the increase will impact private sector wages in NSW or public sector wages in other states.
We will continue to monitor and update you on developments in this area.
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