Public Service Association says pay cap is not aligned with inflation

The Public Service Association (PSA) has called for the NSW government to remove the public sector wage cap, as pay isn’t keeping up with the rising costs of inflation.

On 1 July 2022, NSW government raised the wage cap from 2.5 per cent to 3 per cent, with the possibility of the cap increasing to 3.5 per cent in 2023–24. However, the PSA says this is not enough, as inflation rose 7.8 per cent from December 2021–December 2022.

Stewart Little, general secretary of the PSA, said in a statement: “The government is going into an election in March ignoring the cost-of-living crisis hitting the very people who deliver its services. It needs to scrap the cap.

“PSA members are all over the state, working to protect and serve the people of NSW. The state could not operate without them,” he said.

Issues with the 0.5 per cent wage cap increase have been ongoing since last year. According to a 7 June article, The Guardian reported that Premier Dominic Perrottet said the increase was “fair and responsible”.

Mr Little said in The Guardian article that the decision is, “bewildering and insulting to all frontline workers”.

“Overwhelmingly, our members are angry,” said Mr Little.

The inflation from December 2021–December 2022 far exceeds the wage cap increase. According to the ABS, some cost increases were:

• Food and beverages (9.2 per cent)
• Housing (10.7 per cent)
• Household furnishing and equipment (8.4 per cent)
• Recreation and culture (9 per cent)

The wage cap of 2.5 per cent was introduced in 2011, under the O’Farrell government of NSW. That same year, the PSA launched the “scrap the cap” campaign to try and reverse the decision.

According to Mr Little, as seen in News.com.au, the wage cap could also have a ripple effect onto private sector workers: “The NSW government’s unfair wages cap isn’t just hurting hardworking public servants, it’s now threatening the pay packets of private sector workers,” said Mr Little.

“The NSW public service is the state’s largest employer, meaning low wage growth influences pay rises across Australia.”

However, according to NSW Employee Relations Minister Damien Tudehope, public sector wages increased by 5.6 per cent from 2011–21, more than that of the private sector.

“If we had simply tethered public sector pay to the [official inflation rate], as advocated for by some in the union movement, our public servants would have been paid many thousands’ [sic] less over the last decade,” explained Mr Tudehope.

“What many people also don’t know is that most of our 400,000 public sector workers are entitled to further pay increases each year as a result of career progression, and these pay rises are far above the nominal cap.”