The NSW government will freeze pay rises for public sector workers for 12 months, as it deals with rising unemployment across the state due to the coronavirus pandemic.
Premier Gladys Berejiklian said the measure would save about $3 billion and assured government workers there would be no job losses.
Under the current wages policy, hundreds of thousands of public sector employees can pursue a 2.5 per cent pay rise each year.
However, major pay agreements covering police, nurses and general crown employees are due to expire on June 30.
Awards that are currently in place will not be affected by the wage freeze policy, with the changes set to take effect on an award-by-award basis.
That means about 70 of more than 100 awards would have wages frozen from the beginning of the coming financial year.
Ms Berejiklian said the new policy would include a guarantee of no forced redundancies for all workers, with the exception of senior executives.
However, NSW crossbench MPs are expected to announce a plan to block the Berejiklian government’s wage freeze policy on Wednesday afternoon.
Ms Berejiklian said she hoped pausing pay rises would secure public sector jobs as the state confronts the prospect of a deep recession.
“Whilst we are recovering from the health consequences of the pandemic, we have yet to come to terms with the economic shock,” Ms Berejiklian said.
“The only way NSW will come out of this crisis in a strong position is if we all make sacrifices, and that’s what we’re asking our own workforce to do.”
NSW Treasurer Dom Perrottet pointed to massive disruption in the private sector, including “forced stand-downs, leave without pay, significant pay cuts, job uncertainty or losing their livelihoods altogether”.
“We have to do whatever it takes to make sure we do not end up with a group of long-term unemployed workers who were forced out of the workforce, or young people who never got a go,” the Treasurer said.
Jim Stanford, director of the Centre for Future Work and the Australia Institute, said the move was “another self-inflicted wound in the economy”.
“This is a recipe to take this recession and turn it into a depression,” Mr Stanford said.
“By freezing wages at the very moment the economy needs more income circulating, not less, they’re going to damage consumer spending.
“Worst of all, they’re going to set a terrible precedent that private sector employees are going to follow as well.”
The NSW government is the largest employer in Australia, employing over 400,000 of the state’s 4.2 million total workers.
The latest jobs data from the ABS shows 221,400 people in NSW lost their jobs since the coronavirus pandemic was declared in March.
Wages have fallen across NSW by 4.9 per cent since mid-March, despite some wage growth in sectors like health, social services and education.
Those working within accommodation, food services, manufacturing and science have seen their wages plunge by more than 12 per cent.