Union members in Services Australia will strike for 24 hours after the Community and Public Sector Union rejected the government's service-wide pay deal of 11.2 per cent over three years.
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Members in the department are scheduled to stop work on Monday, October 9, with CPSU national secretary Melissa Donnelly vowing that "our members are ready to increase pressure as needed to secure a better outcome on pay".
The CPSU decided to pursue further action after members showed only "lukewarm support" for the government's offer.
In a poll of more than 15,000 union members, 48.1 per cent rejected the deal while 51.9 per cent voted in support.
Ms Donnelly said the CPSU rejected the deal, despite the slim majority of members voting in favour, "because we know that we can and we should be aiming higher than 50 per cent, plus one".
"We have a unique opportunity with service-wide bargaining to negotiate a package that brings together 160,000 employees across 103 different agencies after what has been an incredibly challenging decade for public sector workers. But an offer with 51 per cent support doesn't do that," she said.
"There is strong support for the conditions package that has been negotiated, including the industry leading working from home rights, increases to paid parental leave, the reintroduction of job security provisions and increased casual loading rates," she said.
"But in an environment where every APS worker is feeling extreme cost of living pressures, the current pay offer doesn't cut it."
Bargaining talks to establish a common pay rise and set of conditions for the Australian Public Service have been underway since March, in a bid to address fractured workplace conditions.
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It is the first round of service-wide bargaining in more than a decade.
This is the second time that the union has rejected the government's pay deal, after pushing back an offer of 10.5 per cent over three years from the Australian Public Service Commission in May.
The union has been calling for a 20 per cent pay increase, including a 9 per cent hike in the first year of the new enterprise agreement - demands that Senator Gallagher previously labelled "impossible" given budget pressures.
The CPSU has already run a Protection Action Ballot and taken industrial action in Services Australia. In August, staff in Services Australia implemented a two-week ban on entering auxiliary codes, which are used by management to track the tasks that individual employees are performing.
The union is currently consulting with members and delegates to decide what action to take in other agencies, and will lodge further applications for Protected Action Ballots soon.
A spokesperson for the APSC said on Wednesday that it was "disappointing" to see reports that the CPSU may escalate industrial action.
"We note, this is in the context that a majority of CPSU members have voted in favour of the full package of pay and conditions on offer," the spokesperson said.