'It is my expectation that agencies do not make further enhancements to tenure-based progression systems'
Public agencies across New Zealand have been instructed to avoid making enhancements to tenure-based progression systems due to the growing unaffordability of such models, according to reports.
Public Service Commissioner Sir Brian Roche issued the directive in a letter to chief executives on 20 December, Radio New Zealand reported.
"It is my expectation that agencies do not make further enhancements to tenure-based progression systems," Roche said, as quoted by RNZ.
The new instruction applies to public service departments and ministries but does not extend to police, schools, or nurses.
According to the commissioner, there should be no new introductions or extensions to tenure-based pay progression models, while the growth of department personnel expenses should not exceed the forecast Consumer Price Index (CPI).
Roche said he has taken into account the concerns of former Public Service Minister Nicola Willis about the growth in personnel costs arising from pay progression systems, which cannot be limited through employer discretion.
"Tenure-based pay progression is the most acute: even without Budget guidance, agencies are finding it unaffordable to increase pay ranges in addition to the increases generated by existing tenure-based progression," he said, as quoted by RNZ.
"This mismatch between union demands and agencies' ability to pay is testing relationships and bargaining dynamics."
Roche added that he expects agencies to examine their remuneration system's design and operation and assess whether it aligns with government expectations on affordability and supporting a high-performing public service.
He also pointed out that agencies relying on pay progression systems to reduce pay gaps would need to consider how to "mitigate the risk where discretion is applied in pay increases if tenure-based progression is being removed or replaced."
Alex Chadwick, deputy chief executive of the PSC, said that if tenure-based progression is replaced in an agency's collective agreement, it would be done through bargaining with the union.
"We expect that any system replacing a tenure-based system would provide appropriate checks and balances to manage any risks regarding discretionary increases," Chadwick told RNZ.
