Cost of living pressures were taken into account before the update, minister Andrew Little says. Photo: RNZ / Angus Dreaver
A public pay freeze introduced during the Covid-19 pandemic has been relaxed, after the government received updated advice.
Guidance previously advised high-earning public servants not receive pay increases, except in exceptional circumstances.
This was not specifically mentioned in updated advice released by the Public Service Commission today.
Public Service Minister Andrew Little said pay restraint was the right approach at the start of the pandemic but things had changed.
"The pay guidance update recognises the current cost of living pressures being felt across the country and the economy," he said.
"I am confident this approach strikes the right balance in difficult times."
Little said the government welcomed progress on public sector pay adjustment (PSPA) agreements.
"More than a dozen collective agreements are now settled in the public service, Crown Agents, and education sectors in line with the agreed PSPA with more underway."
It was estimated PSPA may affect more than 150 collective agreements in the Public Service, Crown agents, Te Whatu Ora - Health New Zealand, state and state-integrated schools, registered kindergarten teachers in free kindergartens, New Zealand Police, and the New Zealand Defence Force.
"A significant number of public sector workers are likely to enter negotiations over the coming year, and so following a proposal by the New Zealand Council of Trade Unions (NZCTU), the government agreed to look into a pay adjustment for all workers at the same time," Little said.
Under the agreed terms of the PSPA workers would receive lump-sum payments of $4000 in year one, and either $2000 or 3 percent of their annual income in year two.
"This is an attempt to give public sector workers an affordable increase that balances the current economic environment and cost of living pressures," Little said.