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The Government announced yesterday that no government employee earning over $100,000 a year will get a pay rise until 2024. Those with salaries with between $60,000 and $100,000 will need to prove exceptional circumstances.
Healthcare worker unions have already voiced concerns that doctors and nurses will move to Australia as a result.
Post Primary Teachers' Association president Melanie Webber told RNZ's Morning Report programme today she was "not entirely surprised" by the freeze.
"I have never heard a finance minister talk up public sector pay increases. We are not negotiating until next year, so we are watching other things very closely.
"Teachers worked astonishingly hard to keep things going and hold things together, provide continuity through lockdown and are continuing to deal with the impacts of the pandemic so we wouldn't want to see a situation like what happened to post-Christchurch [earthquake] where we saw salaries dropping and we had huge teacher shortages as a result."
Public Service Minister Chris Hipkins said the sector needed to show restraint, as others in the private sector continued to feel the effects of the pandemic, and the move would help preserve public sector jobs.
The National Party has condemned the move, saying nurses are not responsible for the government's incompetence.
"The Government needs to reconsider and reverse immediately this pay freeze and take responsibility for out of control public sector growth," MP Mark Mitchell said.
Police Association president Chris Cahill said: "We've had a massive response and without a doubt the theme is 'Where is the Government coming from? What rock are they under? Are they not looking out there and seeing the cost of housing, the cost of rents, the obvious inflation that is coming through?'.
"Every economist is saying inflation is going to be a big issue and any pay freeze in reality, is a pay cut over three years when you've inflation the way it is.
"They are just ignoring the productivity that the public service is putting in. From a police point I can tell you a 44 percent increase over the last four years in family harm incidents attended, mental health going through the roof. Gang members at record numbers.
"They are working hard than ever and this is just a kick in the guts."
As for how police would respond to the pay freeze, Cahill said: "We've got 2000 new officers that have joined in the past four years... but they are at the bottom. They are at that $60,000, $61,000 range. These are the young people that want to start families, that want to buy houses. They are struggling to even rent properties.
"And they are the ones most at risk of walking out the door. They are the ones that we need for the future of new Zealand police, so we're very concerned."
Webber said the pay freeze would exacerbate teacher shortages.
"The Government saying teacher shortages have been solved because of people coming back and because of Covid - what's going to happen is the borders are going to open up again, people are going to return back overseas, but equally you're going to have huge numbers of young teachers are going to say 'why am I staying around?'. They are going to go on OE's and you're going to have older teachers retiring who have maybe held off retirement to get through this.
"Shortages are going to be coming back."
Cahill said the Government's move was "1970 economics".
"What are we going to do next? Roll out carless days to combat climate change? I think we're a lot more sophisticated than that in this day and age and how can you have good faith bargaining when you start with a three-year wage freeze.
"They need to understand that for public servants living in New Zealand, three-year wage freezes is not something they are going to put up with."
Health exodus feared
Unions are worried that doctors and nurses will move to Australia following the Government's freeze on public sector salaries.
Sarah Dalton of senior doctors' union The Association of Salaried Medical Specialists said it was a poor decision by the Government.
"It's not a reasonable ask for our health workforce to say 'hey, just go backwards. But by the way, can you run these extra clinics, can you deal with these overloaded emergency departments, can you cope with this not fit-for-purpose building?'
"It's just too many things, and it suggests that this health workforce isn't valued," Dalton said.
Even minimal inflation, Dalton said, will have people behind by at least 5% in the next few years. Rent costs and interest rates are expected to rise too.
Nurses Union spokesperson Glenda Alexander said, in places like Auckland, $60,000 - the wage freeze threshold - doesn't go far.
"There are lots of people in that zone who are very much struggling to make ends meet."
However the Taxpayers Union said restraint in the public sector is exactly what is needed right now, describing public debt post-Covid as "ballooning".
Spokesperson Louis Houlbrooke said the private sector had been feeling it the last year and the public sector should also make some sacrifice.
"While $60,000 isn't a huge salary, it comes with a level of job security that you wouldn't see in the private sector. So a pay freeze is a pretty small price to pay for that, especially when you consider it's only for three years.
But Alexander said many in the public sector had already offered a lot.
"Our nurses responded when required, right at the outset of this pandemic, and have been making a huge contribution to keeping our border safe, dealing with the returnees... they'll feel like this is a bit of a slap in the face."
She said this might actually be the final push for some to leave for Australia.
"I think if the borders were more open, this would be a deciding factor," she said.
"Before Covid struck a lot of our nurses were going to Australia even for a six-month period to pay off mortgages and earn much more. That could be an enticement now."
Dalton thought the same. She said Australia already paid 40 to 60% more for specialists, so this freeze might just send talent packing.
"We certainly hope it doesn't exacerbate it, but it absolutely might. We think not even allowing people to keep pace with inflation and the cost of living is a really poor way to treat a critical workforce that the Minister of Health has already acknowledged has significant shortages," Dalton said.