Prime Minister Jacinda Ardern has defended the Government's plans to extend a pay freeze to the public sector for three years saying at least it wasn't a blanket rule for all workers.
Ardern told Breakfast the move did not impact the worst-paid people in the sector because the Government still wanted to address pay equity as there were too many low paid workers in New Zealand.
The move would mean those in the public sector service earning more than $60,000 can only expect pay increases in "exceptional circumstances" while those on more than $100,000 won't get any more money until 2024.
The Government is extending the pay freeze in a move to reduce debt from the Covid-19 response.
Ardern said the guidelines to the chief executives in the public sector was just a starting point and now there would be good faith negotiations with the unions.
However, she disagreed the Government had got it wrong.
"Our view has been despite the times we are in we have to keep lifting up the lowest pay."
The guidelines didn't stop teachers, police and nurses from moving through pay bands - it just didn't give any room for those pay bands to be adjusted, she said.
Despite being pressed on how much the pay freeze would save, Ardern refused to give even a ballpark figure.
The announcement has been met with strong opposition with the Public Service Association (PSA) saying it is punishing workers "after a year of sacrifice, hard work and success protecting New Zealanders from Covid-19".
The CTU has also said it will fight the move.
Organisations representing police, doctors, nurses and teachers have also labelled the decision as unacceptable.
Union bosses are planning to meet the Government tomorrow to express their concerns.