Public servants get 3% pay rise, government considers wage deal for whole APS

Those expecting an annual pay increase before August 31 next year will receive the 3 per cent rise in a move that pips private sector wage growth by 0.3 per cent.

The former Coalition government made changes in late 2020 tying public sector wage increases to the private sector after years of it being capped at 2 per cent.

Public Service Minister Katy Gallagher said on Thursday the interim pay deal, which applies to all Commonwealth employees, shows the government's commitment to valuing public service work.

It also comes as the government and unions continue to iron out the details of how a public sector-wide bargaining agreement could work.

"Re-engaging with genuine bargaining, and establishing the public service as a model employer, is a key focus of the Albanese Labor government," she said.

The reforms could result in consistent pay and conditions across each department and agency, while agency-specific conditions could be negotiated at an individual agency level.

The interim bargaining agreement will offer certainty and consistency for public servants while work is underway, the minister added.

"The government is committed to working in partnership with agencies, unions and employees to develop a comprehensive workplace relations approach for the Australian Public Service," she said.

"This is a complex undertaking as there are significant differences in pay, terms and conditions across the Commonwealth. The proposed reform will need to include careful consideration and consultation on these matters."

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The government is looking to the public sector to set the bar for industries as it pushes to legislate multi-employer agreements.

Prime Minister Anthony Albanese said last month sector-wide bargaining would help people to better deal with the rising cost of living.

"Better bargaining will mean stronger wages growth, helping people with rising living costs," he said.

It comes as the Reserve Bank again lifted the cash rate on Tuesday by 25 basis points to 2.6 per cent.

Annual wage increases for public servants have been steadily on the decline since 2017, hitting their lowest mark in 2020 as the COVID-19 pandemic struck.

The former Coalition government deferred wage rises for six months in April 2020, saying bureaucrats must share the economic burden of the global health crisis.

Figures from the Australian Bureau of Statistics released last year showed public sector wages had grown just 1.5 per cent during 2020, marking the lowest rate since the bureau's wages series began in 1997.

A 2 per cent wage rise cap was also replaced under the former Coalition government, instead tying rises to private sector pay increases.

It meant pay increases greater than 2 per cent could be negotiated if private sector employers were awarding staff pay growth above that rate.

But pay rises would be capped if economic conditions are poor and private sector wage growth is low.

An August report also revealed the wages of top bureaucrats were rising at a faster rate than their junior counterparts last year

The Australian Public Service Remuneration Report 2021 showed senior executives had received a 4.2 per cent increase to their base salary in 2021, compared with a 3 per cent bump for non-executives.

SES 2 staff received the highest increase at 4.3 per cent while those at the APS 2 level received a 1.6 per cent increase - the lowest across the bands.