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About the public service pay freeze

Written By: - Date published: 7:40 am, May 6th, 2021 - 45 comments
Categories: chris hipkins, grant robertson, Living Wage, uncategorized, Unions, wages, workers' rights - Tags:

A few of us on the left have issues with the public service wage freeze announced by Grant Robertson and Chris Hipkins yesterday.

A freeze for the wealthiest of public servants I suspect most of us would accept if not be rather happy about.  But by setting the salary level so low, at $60,000 per annum, the threat is that previous gains for teachers and nurses will be undermined.  Especially for the medical system the implications are dire.

From Jordan Bond at Radio New Zealand:

Unions are worried that doctors and nurses will move to Australia following the government’s freeze on public sector salaries.

Under new government rules, three-quarters of people working in the public sector are unlikely to get a salary bump until at least 2024.

No government employee earning over $100,000 a year will get a pay rise until 2024. And those with salaries with between $60,000 and $100,000 will need to prove exceptional circumstances.

It’s not only bureaucrats in Wellington – it includes border workers, hospital staff, prison guards and social workers.

Sarah Dalton of senior doctors’ union The Association of Salaried Medical Specialists said it was a poor decision by the government.

“It’s not a reasonable ask for our health workforce to say ‘hey, just go backwards. But by the way, can you run these extra clinics, can you deal with these overloaded emergency departments, can you cope with this not fit-for-purpose building?’ It’s just too many things, and it suggests that this health workforce isn’t valued,” Dalton said.

The PSA is not pleased.  From Newshub:

PSA national secretary Erin Polaczuk is angered by the pay freeze.

“The public service has never had more expectation put on them, and not only is that expectation weighing on their shoulders but now they’re being slapped in the face by being told that they’re not going to get decent pay increases.”

The pay freeze has to hurt that much more when private contractors are being called in to do the work of public servants and paid eye-watering sums – the cost of them has ballooned out to nearly a billion dollars a year.

If it was on those earning over $200,000 I would not batter an eyelid.  But $60,000 seems very low.

The timing is poor.  The Police Association had just started discussing with Police Officers what stance they should adopt in this year’s negotiations.  How can it be good faith bargaining for one side to suddenly change the rules?

The implications for pay parity are not at this stage clear.

And there are two other recent pieces of news that cast doubt on the need to do this.  Grant Robertson revealed yesterday that there was $936 million dollars of unspent money tagged for Covid expenditure that could be applied to savings.  And the unemployment rate dropped to 4.7%, ahead of market expectations.  Seems like all of this stimulus spending is having a beneficial effect.

I anticipate the public sector unions will be having some rather pointed discussions with Government MPs.  It will be interesting to see how this goes.

 

 

45 comments on “About the public service pay freeze ”

  1. Tiger Mountain 1

    Wage Freeze? what the…we need a Rent Freeze that is for sure.

    The NZ neo liberal state provides for, and encourages triangulation of employment relationships. Funder provider splits and various manifestations of managerialism can make it tricky to keep up with.

    Ms Polaczuk makes a good point about the burgeoning contractors–I know personally a senior woman in public housing sector who was made redundant, and she returned as a contractor with within a fortnight!

    The NZ central Labour organisation should be up on its hind legs advocating for public servants, teachers and cops–and all who are potentially affected. Maybe the Govt. is just trying an employer bargaining tactic to kick things off? Really the workers affected need to get their act together and fight back. I would say though that the PSA rarely made such noises as they did yesterday when there was 9 years of a National Govt. Full praise to the Teachers though during the Key/Parata years when they fought hard on bulk funding, Charter Schools and National Standards.

    • Sabine 1.1

      +1 Rent freeze for the next three years would be awesome.

      and making people redundant and them calling them in as contractors is nothing more then creative accounting, i remove some 'fixed costs' aka labour and put them in 'other expenditure'. And thus it looks like i have reduced my fixed costs, and the share market will go whoooooooo. Never mind i hired the same person back with no benefits, no holiday pay, no sickleave etc.

      • ghostwhowalksnz 1.1.1

        That was a central feature of Bill-English-economics in public service spending . There was a compulsory annual 2% savings in core expenditure, mainly wage costs. It drove a lot of the recurring restructuring for its own sake as a way to 'do less with less' money. Contractors and outsourcing , even though it didnt save money overall was used to give illusion of the annual 2% saving in core expenses.

    • J Real 1.2

      It's an interesting point you make regarding staff being made redundant, and returning as contractors. The salary and wages are OPEX, and the contractor's fees are CAPEX, it's a fudge of the balance sheet and ends up being much more expensive.

  2. Sabine 2

    I think that the Labour Party is flying a trial balloon and will now think about it a day or three and then will maybe increase the threshold from 60.000 – 70.000 or there about. Its a form of polling i guess, and nothing is done if the polls ain't right.

    I and many others in this country have absolutely no issue with people earning over 100.000 to not get a pay increase this year or the next to be honest. Or maybe the Government could offer them 57 NZD spread out payments until 2023?

    But i hope that the government has done something about the cleaners at the MIQ hotels that are paid minimum wage.

    Maybe really the country needs to get some perspective on risk and income.

    Also a great way to increase the pay of nurses and doctors, specially the youngers ones that still have huge student loans to pay, is to cancel the student loans of those that are happy to stay in the country for the next three years. That could immediately increase the pay of those that are on a lower scale.

    And that has been mentioned more then once as a way to keep nurses or doctors in the country. So maybe really the government needs to put the creative thinking hat on just for once, and find other solutions rather then either removing money or throwing it at a problem.

  3. Cricklewood 3

    Found it staggering that the Labour party which purportedly supports the union movement would then go and tell our most unionized work forces that there will be no pay increases for 3 years.. in an environment where basic living costs are soaring out of control…

    Lets face it the there would be industrial action and the left in general would be on the streets a Nat govt announced this… and rightly so…

    Leftwing supporters of this govt need to take the rose tinted glasses off…

    • ghostwhowalksnz 3.1

      Arent many staff on 'pay scales' where theres a general movement to a higher scale – upon satisfactory performance? – every year or so.

      I just checked the PSA-MBIE collective agreement and it does mention 'annual performance increase' ( perhaps thats the new name for moving up scale) and also talks about 'progression rounds'

      https://www.psa.org.nz/assets/Uploads/MBIE-Collective-Agreement-2018-to-2020-Final.pdf

    • " Found it staggering that the Labour party which purportedly supports the union movement "

      There is no purportedly about it. The Social Democrats support the neo liberal economy which has never been about protection and the welfare of vulnerable working people rather a resource to be plundered at every opportunity. The fact that the union movement has no where near the authority it once had and now cowers behind the lesser of two evils is a major impediment in being a major player in the economy.

      The ECA which is nearly thirty years old this month set the rules of the game and how governments and its financial supporters viewed working people and their place in the market economy.

      Disposable.

      " Left wing supporters of this govt need to take the rose tinted glasses off…"

      I think that they need to get their eyesight checked and realise that this is as good as it will ever get.

      • mosa 3.2.1

        " I anticipate the public sector unions will be having some rather pointed discussions with Government MPs. It will be interesting to see how this goes "

        Micky you know damn well that " pointed " discussions don't mean shite !

        Your Social Democrat heroes DO NOT CARE about the people they pretend to represent.

        The Labour party is dead. There is no left wing Mickey and that includes the capitalists New Labour that was an attempt to present a neo liberal party of the left to appeal to those who were sick of the Conservative parties but maintain a kinder face of the same market bullshit.

        Mickey re connect with your real Labour party and what it used to stand for.

  4. Incognito 4

    About 25% of the PS are earning less than $60k, which is above the NZ median wage, which is something like $54k, I believe. This is the kind of progressive policy I’d expect from a Labour Government. More of that, please!

    • Herodotus 4.1

      So those under $60k Will their pay rate cap out at $60k ? Or will we have the situation that on $60k no rise but someone earning close to $60k could leap frog someone on $60k ?

      also will a part time worker on a collective earning less than 60k be bound to no increase as the full time rate exceeds $60k such a generalised statement has many fish hooks, I hope the govt has done the work on the detail.

      what hope of the health system reforms that will need plenty of $$ to implement when the workers( who will be implanting) are being told to now suffer under an auster regime. The budget will be very interesting when it is released😉

      • Forget now 4.1.1

        There is not much hope for, and none within, the public health system. This; "doing more with less", austerity aspiration, will translate to; doing less with less, and then sticking the blame on those at the bottom of the heap for not being superhuman.

        I know at least one nurse who was on the verge of taking a private job simply because of the imminent Health Board restructuring, as they can't face learning to navigate a new bureaucracy. I can't see how this price freeze will convince them to endure those grim working conditions any longer.

        May 20th is budget day?

  5. mikesh 5

    Coming, as it does, hard on the heels of efforts to ensure that policies get implemented, this move makes it appear that the Adern/Robertson regime considers the civil service too obstructive. Payback time, perhaps?

    • Sabine 5.1

      That would not behoove them at all. IF they have grievances with the public sector then they can start with the official ways of weeding out un or under performing staff.

      A pay freeze in vengeance would actually hit those that do the job the hardest. My opinion of labour is lala at best, but that i do not think / i hope is not what led to this decision.

  6. Nic the NZer 6

    The debate needs to move on from claiming a moral good due to balancing the govt budget, there is no such moral good there and the steps taken to get there are frequently harmful (such as this public sector pay freeze and the likely diminution of the public sectors ability to deliver).

    As such the recent announcement of less covid expenditure than budgeted is irrelevant. The amount of projected expenditure was always a guess (forecast) unsurprisingly it was a bit wrong but this hardly tells us something about the right amount of expenditure. The only important part for the govt to be able to pay (wages) is the the payment system operating inside the RBNZ is operational. If that is the case the govt can pay someone by depositing funds in their account via the payments system. Because only the RBNZ can have created the funds which move in this accounting system and because they run it, it is irrelevant how much in deficit or surplus the govt budget is to making such payments.

  7. Stuart Munro 7

    The policy may be intended to address the creeping gap that is generated by percentage increases being spread across both low and high earners. Reining in the pseudo-corporate expectations of higher paid civil servants, who arguably have not improved service delivery, is probably not out of place. Setting it as low as 60k is however – a fixed income in an inflating cost environment is no trivial matter.

  8. Brendan 8

    Nat voter here.

    I am happy to support the Unions on this one.

    In theory a pay freeze is a good idea. But I smell the inflation bomb coming. Nor has the govt gone and advertised some kind of general spending restraint.

    In any case the individual departments set their own employment deals based upon their own individual funding. A pay freeze just messes this up. Let each department manage their own employment relations.

    Of course if the government is so dedicated to this policy, then simply let them win. Instead get all those other things workers were wanting, perhaps an extra week annual leave or something.

    • mosa 8.1

      " Nat voter here "

      " I am happy to support the Unions on this one "

      Then why do you support and vote ? an anti worker pro business party like the Nasty Natz ? with their anti worker , union policies and supporters ?

      If you support a union then you aren't out of the National closet.

      If you support a union action then that shows you have got some human compassion for the oppressed.

      The National party has no compassion only cruelty for those they see as expendable.

  9. Descendant Of Smith 9

    Well National did the same thing. Those of us that call Labour a pale blue imitation of National oft get ridiculed.

    "The public sector wage freeze is part of an austerity policy designed to impose the burden of the economic crisis on the working class."

    https://www.wsws.org/en/articles/2009/12/nzwa-d15.html

    Look at some of the policies they have enacted:

    1. Removing spouse from getting NZS forcing partners to work longer past retirement age or live on $140-00 per week less
    2. Charge poor people 25% of their benefit for emergency housing cause it is "fairer". The biggest misuse of the English language I can think of.
    4. Pay working people (and partners who lost jobs) a benefit rate much higher than benefits rates with less strings
    3. Freeze public servants wages and justify this by the cost of supporting the capitalists

    versus some of the ones they have zero interest in

    1. 8 hour working day, 40 hour working week
    2. Giving workers back the right to strike

    That being said this freeze smacks of Peter Hughes' influence on the government. The SSC has long stopped supporting the average public servant in any way shape or form.

    The PSA and other unions can respond by only negotiating annual contracts while the freeze is on giving the legal ability to strike each year and to respond to changing economic conditions. Then if there are large cost of living increases the public servants can decide if they are going to do something about it.

    They are letting National control the dialogue – the moaning about the increase in the public service by National seems to provoke this type of Pavlovian response. Labour live in fear that if they do too much or go to far from the middle they won't remain in power. It's a perfect example of why abused people stay with abusers – too scared to stay too scared to go. They lack confidence – refusal to implement WEAG recommendations when the report was released – riding on a high of support and with high quality expert advice they failed to act.

    The new office for implementation needs to take a good hard look at the politicians themselves – it is them failing to implement.

    • RedBaronCV 9.1

      Point 1 – removing the spouse from NZS isn't all bad.The internet bride market meant that a number of young women were getting it. Also if the over 65 spouse dies then the younger one loses eligibility and has to go back to the job market or unemployment. Plus an awful lot of mainly older single women get to work until they are 65 regardless and some of these are none too pleased about seeing the internet brides being paid. So it could be seen as discrimination on the grounds of marital status. I assume under 65 spouses are eligible for unemployment benefits.

      But there could have been some transition measures. Spouses under say 55-60 could have had a couple of years grace then been cut off NZS so they are back to the job market/ unemployment. Spouses very close to 65 could have been grandfathered in for a couple of years.

      • Descendant Of Smith 9.1.1

        What a bunch of racist dog-whistling. There are only, according to the MSD website 3,755 people under the age of 65 getting NZS. Most will be either unwell themselves, have a disability, be looking after the unwell older partner i.e. be their caregiver be near NZS age.

        The consequence of the change is that those who are in that situation will now either have to work longer until their partner turns 65 or live off $140 per week less as the benefit is that much lower than the NZS rate.

        It's yet another plank of support that the baby boomers have enjoyed for themselves that successive governments have withdrawn – from tax-breaks for non-working spouses, to universal family benefit, to housing loans, to free education, to state housing to a welfare system predicated on government picking up the slack in the labour market by employing people with disabilities and school leavers.

        You spurious notion about "internet brides" is typical of why policy and decision making shouldn't be made by "I reckon". Your perception and subsequent attitude in this matter seems just awful.

        • RedBaronCV 9.1.1.1

          Cut the racist dog whistle bit. Nothing about " I met someone on the internet and imported them here" supports your comment. It actually says more about you than me. You provide absolutely no support either for your breakdown of the figure of 3755 to support your analysis.as them being "Ill or caring for ill people".

          But the point you have really missed is that to you it is okay for other older single people both male and female to have to work until they are 65 and pay taxes to support these under 65's receiving super when these same people if they were not working would be dependent on unemployment or sickness benefits or be looked after by someone on a care giving benefit. Yes these benefits may be less but they are less for everyone. Other groups also work and care for the ill etc without this benefit. These benefits are available to NZS partners too if needed.

          The only apparent reason for demanding a super benefit for these spouses seems to rest in a sort of residual male entitlement (the underages are likely to be largely women) who want the rest of society to support their needs even when they themselves may not want to support other social measures.

          As to the withdrawal of other social supports – yes that has happened nobody will disagree with that – so the question then becomes which ones should we have or reinstate. And this NZ super measure will affect boomers. There are still about 8 years of them to retire.

    • Gabby 9.2

      It is telling that wage freeze is ok but rent freeze unacceptable.

  10. RedBaronCV 10

    I think this is pretty short sighted too. Higher tax rates on higher incomes and some caps on the individual higher salaries and maybe $ rises not % rises above a certain level.

    Plus some sort of pooling arrangement for the highest group of salaries so it cannot increase too much as a total but the HR and IT manager can then fight it out for who needs what.

  11. tim o 11

    Do we really have to do the handwringing 'look we need to freeze the salaries of those fatcat doctors on $100k' thing in order to mildly criticise this move?

    This is an awful move by a theoretically Labour government and it's super weird to me that so many leftists are 'well, THOSE workers should be punished'.

  12. Corey Humm 12

    I was at a working class pub last night talking to factory workers and tradies who all thought this was excellent and thatb

  13. Corey Humm 13

    The PSA protects winz workers , ird,OT and and powermad unelected neoliberal Wellington mandarins who do all they can to stop any kind of government progress the public likes these people about as much as it likes Satan, covid is more popular with the public so I wish the PSA good luck with there hour long protests. the fact is MSD workers are hated by the public the public thinks they're a bunch of vindictive psychopathic sociopaths who ruin working class and poor people's lives to make themselves feel better they blackmail poor people with their nudes they kick people off the benefit for going on a second tinder date and they are just awful. Civil servants always be telling people to live within their means well it's time they did too, 60 minimum is dece wage if you can't live on it get another job. Move to australia. The public don't care about the bourgeoisie lanyard mafia whose been telling hospo and tourism to harden up for over a year now throwing tantrums cos they may only get to go to melbourne or brisbane this year and not both. The only time the lanyard mafia goes on strike is when there's a labour govt cos unlike Unite, the meat workers the lanyard mafia is a bunch of soft bourgeoisie champagne guzzling socialists who have more in common with the tory's but the tory's hate them. People are losing their jobs their hours and the lanyard mafia who get public money have the audacity to ask working class people that get half their pay to have "solidarity" with the bullies and villains in MSD ird and OT , I'm sure grant is shaking in his boots

  14. Enough is Enough 14

    At a time when the cost of living is increasing this is incredibly mean and shortsighted.

    If David Farrar is praising this (as he is) then you know this is a fucking terrible idea.

  15. Bryan 15

    Oh bad luck to the piss-weak NZNO, PSA and the ultimate superhero Richard Wagstaff.

    All those years of licking Labour's bottom wasted.

    Saint Margaret Wilson saved you last pay round – any candidates to save you from perdition this time.

    • ghostwhowalksnz 15.1

      What 'bottom' licking ?

      Those unions, Nurses teachers etc arent affiliated to Labour party , nor do they donate to the party – check out donations list today – its more the lower paid blue collar unions than the professional class

      Pay rounds are every 2 -3 years , not 16 years ….. talking about bottoms, you are full of $#@%

  16. Peter 16

    All government workers who have increases built into their contracts will get their increases. e.g. I believe as part of their last negotiations teachers will get increases in July this year.

  17. mac1 17

    I heard Minister Hipkins in Parliament today say when asked about salaries for police and teachers, that those on stepped annual salary increment schemes would continue to receive them up till the top of the scale

    BTW, mickey, ‘battering eyebrows’ is not advised, unless deep-frying………. 🙂

  18. tsmithfield 18

    As a right winger I find it outrageous that a government can interfere with the right of employees to negotiate with their employers about their wages and conditions. This fundamental right is no different to the right to negotiate prices for any product or service.

    This move is yet another attempt by the government to exercise power and control without giving the slightest consideration to the unintended consequences. If people can't achieve the market rate for their labour then they will go somewhere else such as Australia where they can get a better rate.

    Price freezes of any type end up resulting in shortages and a degradation of services.

    • Tricledrown 18.1

      Tsmithfield you must have been puking your ring out when National cut civil servants pay and numbers only to hire consultants at 3 times their wages.Cronies like Jenny Shipley paid $600,000 plus for 16 meetings that failed the people of CHCH.

  19. weka 19

    This is probably the most mind boggling thing I’ve seen this government do. Why would you freeze wages of mid range public servants during a global pandemic instead of say taxing wealth?

    • observer 19.1

      @weka

      Agreed. I do not understand why they have done this. Not justified in economic, political or moral terms. No excuse.

      To be clear: my response is not "bad Labour, will vote National". Far from it. I will join the protests, demanding Labour do the right thing for the workers, and their own supporters, of which I am one.

      I hope they realise their mistake ASAP.

      • weka 19.1.1

        Any mistake they realise will be around fall out not a problem with the policy 😉

        • arkie 19.1.1.1

          Our essential workers in the public service have been keeping us safe during a global pandemic, but earlier this week the Labour Government announced that they will suppress public wages for the next three years.

          The announcement means all public service workers earning $60,000 or more – which includes essential workers such as nurses and people on the front line at the border – won’t have their pay keep up with the cost of living.

          After the last year we know how much we all – including Labour – value our essential workers. With enough public pressure, we can convince Labour that suppressing the wages of our wonderful essential workers doesn’t get the balance right.

          Sign the petition and show your support for Minister of Finance Grant Robertson and Minister for the Public Service Chris Hipkins to reverse the decision to suppress wages of the public service.

          https://action.greens.org.nz/support_our_essential_workers

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