Public service pay restraint, the so-called pay freeze implemented following the pandemic, has been considerably reduced according to new guidance published on Tuesday.

The specific advice to hold pay for people earning over $100,000 has been scrapped, with the guidance predominantly moving from pay restraint to acknowledging the cost of living pressures. 

The aim of the pay freeze was to slow down wage growth for New Zealand’s higher earners during the Covid crisis. Introduced in 2020, the restraint’s intention was for the majority of public servants to receive minimal or no pay rise, with increases aimed at people earning under $60,000. 

The new guidance includes a feature on pay strategies, helping to resolve recruitment and retention problems, Stuff.co.nz reports, which has proved a substantial issue within the public service. 

According to Public Service Minister Andrew Little, past guidance “had a greater emphasis on pay restraint, especially for higher paid roles, and was fit for purpose in response to Covid.” 

He added that high turnover was evident in public service. “We have problems with attrition, so we had to make sure that what we put up was reasonable.”

He went on to say: “The pay guidance update recognises the current cost of living pressures being felt across the country and the economy.”

Earlier in March, the minister said the public service pay restraint had been revised at the end of 2022. 

“The public service pay restraint has been effective and has achieved a number of objectives that we set out for,” he stated at the time.

“Pay for the top earners was held, and it was lifted for those at the bottom.

“The average public service annual salary as of June 2022 was $90,800, an increase of 3.7% on the previous year ($87,600).”

According to National’s public service spokesperson Simeon Brown: “Labour’s failed pay freeze has ended with new Public Service Pay Guidance allowing the public service to significantly increase wages across the public service.

“Ensuring public servants can deal with the cost-of-living crisis that Labour helped create is important, however, New Zealanders also want a public service which is delivering results for Kiwis.”

Whereas, Public Service Association national secretary, Kerry Davies commented that the prior restraint “put many under pressure during this cost-of-living crisis and contributed to serious retention and recruitment issues.”