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The Guardian - AU
The Guardian - AU
Michael McGowan

Public sector pay to fall under NSW government wage cap, report finds

teachers protesting outside NSW parliament house
Teachers are among a number of public sector workers who are predicted to be thousands of dollars worse off due to the 2.5% cap on wage increases. Photograph: Jenny Evans/Getty Images

Public sector workers will lose thousands of dollars a year due to rising cost of living pressures unless the New South Wales government scraps its controversial cap on wages, according to a new report released ahead of plans for further industrial action.

As a coalition of unions prepares to ramp up its campaign against the Coalition, the report, commissioned by Unions NSW, found nurses, teachers, police and paramedics all face being thousands of dollars worse off due to the 2.5% cap on wage increases introduced in 2011.

The study, by Griffith University’s emeritus professor of industrial relations, David Peetz, found that the 5.1% rise in the consumer prices index means a school teacher on a band two salary would see their wages go backwards by $2,509 this financial year.

A second-year paramedic would lose $2,015, while a registered nurse would be $1,986 worse off. The report, commissioned by Unions NSW, found a senior constable in the NSW Police would lose $2,624.

The report’s release coincides with the launch of a multi-sector campaign run by Unions NSW in an attempt to force the government’s hand on a series of industrial disputes.

The government has been locked in protracted negotiations with the Rail, Tram and Bus Union for more than a year, while nurses, teachers, paramedics and bus drivers have also taken industrial action in recent months.

This week the Public Sector Association, which represents prison guards and civilian police officers among other industries, plans to hold its own strike.

The head of Unions NSW, Mark Morey, promised there would be “escalating industrial action” across the public sector unless the government committed to a substantial pay bump and improved conditions for workers after two years of intense workloads during the Covid-19 pandemic.

“Unlike government ministers I get out and talk to our members and they’re all telling me the same thing – we’ve had enough,” he said.

“I haven’t heard so many people talking about wanting to take industrial action in 20 years and unless the government fixes it they’re going to have a lot more strikes this year.”

While the premier, Dominic Perrottet, has said that the government will announce “fair and reasonable” changes to wages in this month’s state budget, he also warned that it would be unlikely to meet all of the union movement’s demands.

The state’s industrial relations minister, Damien Tudehope, who has been tasked with solving the increasingly fraught union standoff, said the government was “considering its wages position” ahead of the budget, but would not say whether the cap would be abolished.

“The people of NSW expect us to strike the right balance between pay increases for public servants and putting tax payer dollars towards essential programs and projects,” he said.

“The government’s wages policy aims to provide fair remuneration and other conditions of employment without compromising services or investment in our state.”

While Tudehope said that a 2.5% policy was introduced under Labor, he conceded it was based on a 2-3% target inflation range. He also said that public sector wages had increased by 4.2% in real terms since the government was elected a decade ago.

“This is greater than the real wage increases in the private sector of 2.7%,” he said.

But studies have previously found that public sector wage caps have also played a role in stifling private sector pay rises, something Peetz said has occurred in NSW because of the role of the cap in cementing lower “wage norms” across the economy, despite low unemployment and increased productivity.

“The most important factor shaping wage norms that state governments can influence is the role of public sector pay policy,” he said in the report.

That impact has seen the Independent Education Union – which represents private school teachers – also joining the wave of industrial action in NSW.

The government will come under increased pressure to address wages after the new federal government made a submission to the Fair Work Commission backing a push to increase the minimum wage by at least 5.1%.

The Peetz report said increases in the consumer prices index over the next three years – based on forecasts from the Reserve Bank and the most recent federal budget – mean workers would continue to lose money under the cap.

His analysis argues that the real wage of a second-year prison guard, for example, is set to go backwards by $4,647 to June 2025. A senior constable in the NSW Police would see their pay go backwards by more than $6,000 in real terms over the next three years.

The impact of state government wage caps has been the subject of criticism from the governor of the Reserve Bank, Philip Lowe, who has repeatedly warned about their role in subduing wage growth.

Morey warned the union movement would be watching closely to see what commitments the opposition leader, Chris Minns, made around wages.

“I promise they’ll have no qualms protesting out the front of an ALP conference in October if they don’t get some kind [of] guarantee about conditions,” he said.

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