Public sector pay jumps ahead

Thursday, 8 February 2024

Recent settlements for health workers and teachers help explain the increase, but pay rises in public administration also outpaced the private sector.

The average hourly earnings of public sector workers leapt 2.9% during the last three months of last year, taking the annual increase to 7.7%, according to Stats NZ.

The quarterly increase was nearly six times the 0.5% average rise in hourly earnings it recorded in the private sector.

The annual increase was the largest in 16 years, at least once overtime was excluded, and compared with a 6.4% average increase in private sector hourly-earnings, with both well ahead of the inflation rate for the same period, which has been measured at 4.7%.

Public servants who fear becoming the meat in the sandwich as the Government cuts costs met in Midland Park for a sausage sizzle in the run-up to Christmas (video first published December 12, 2023).

It continued a trend evident over the past 15 months that has seen increases in hourly earnings in the public sector rise, while those in the private sector trend down, and comes as the Government asks public service bosses to suggest ways to slash costs.

Stats NZ employment indications manager Sue Chapman said the growth in public sector earnings followed a period of “pay restraint” between April 2020 and March 2023.

More than half of all public sector employees were employed in the education and health sectors, which both had pay agreements that came into effect late in the year, Chapman noted.

But Stats NZ also recorded an 8.2% annual rise and 1.8% quarterly rise among people employed outside of those sectors in “public administration and safety”.

Kerry Davies, joint national secretary of the Public Service Association, said wages of people working for public service departments had been “falling behind in real terms for many years and well behind private sector wage increases”.

That was based on data from Stats NZ’s Labour Cost Index, which attempts to adjust raw pay data to reflect the quality of work being performed.

That shows increases in public sector pay — outside of the health and education sectors — lagging increases in the private sector since 2001.

“Only recent increases in 2023 after the pay freeze was lifted through the Public Sector Pay Adjustment Process and pay equity settlements have provided some relief for public service workers during the cost of living crisis,” Davies said.