On Tuesday 16 May 2023 the Chief Negotiator for APS-wide bargaining, Peter Riordan PSM CF, tabled the Commonwealth’s Pay Offer for APS employees with Unions and Individual Bargaining Representatives (IBRs).
The Australian Government is committed to providing APS employees with fair and equitable conditions of employment through genuine APS bargaining. In addition to negotiating a set of common terms and conditions, we are also seeking to provide a fair and affordable pay rise for APS employees. At the end of this process, APS employees can expect a package of pay and common conditions that better position the APS as a model employer and employer of choice.
The Commonwealth’s pay offer as tabled today represents the largest pay increase that APS employees will have received in over ten years.
The Commonwealth’s pay offer is for 10.5% over 3 years with the following breakdown:
- 4 per cent in the first year.
- 3.5 per cent in the second year.
- 3 per cent in the third year.
The date of effect for any agreed pay increase is a matter for APS-wide bargaining.
How was this offer determined?
The Commonwealth considered a range of factors when determining its pay offer, including:
- recent wage outcomes across Australia
- numerous economic indicators
- the current labour market
- Budgetary considerations
Why this pay offer?
This is a fair pay offer which provides a pay rise to APS employees while balancing the Government’s broader fiscal responsibilities on behalf of all Australians.
Specifically, the Commonwealth’s pay offer is tailored to forecasts of both inflation and wages growth.
The Department of the Treasury forecasts that inflation has passed its peak and has started to decline. The Budget forecasts that inflation will decline to 3.25 per cent in 2024-25 and reach 2.5 per cent by 2026-27.
Average wage growth is expected to peak around 4 per cent later this year before easing over 2024 and 2025.
What this means for you
As an example, an APS employee who currently earns a salary of $95,873, will get a total pay increase of $10,421 over 3 years under this offer. Their salary would increase to:
- $99,708 in the first year
- $103,198 in the second
- $106,294 in the third.
The below table shows the impact of the pay increase at every classification. The below salary values are medians, or mid-points, meaning half of employees at each classification would currently earn a salary above or below these figures.
Table 1: Impact on median base salaries as at 31 December 2021
| Classification | Current | Year 1 | Year 2 | Year 3 | Benefit over 3 years |
|---|---|---|---|---|---|
| Grad | 67,661 | 70,367 | 72,830 | 75,015 | Increase of $7,354 |
| APS 1 | 52,792 | 54,904 | 56,825 | 58,530 | Increase of $5,738 |
| APS 2 | 58,059 | 60,381 | 62,495 | 64,370 | Increase of $6,311 |
| APS 3 | 66,563 | 69,226 | 71,648 | 73,798 | Increase of $7,235 |
| APS 4 | 76,103 | 79,147 | 81,917 | 84,375 | Increase of $8,272 |
| APS 5 | 82,059 | 85,341 | 88,328 | 90,978 | Increase of $8,919 |
| APS 6 | 95,873 | 99,708 | 103,198 | 106,294 | Increase of $10,421 |
| EL 1 | 119,651 | 124,437 | 128,792 | 132,656 | Increase of $13,005 |
| EL 2 | 148,315 | 154,248 | 159,646 | 164,436 | Increase of $16,121 |
In addition to this proposed headline pay increase, the Chief Negotiator will also seek to take initial steps to reduce pay fragmentation. Proposals on pay fragmentation will be discussed in late May 2023 and may provide additional pay rises for some employees in the lowest-paid APS agencies.
What happens next?
The Chief Negotiator will genuinely consider all pay claims. In the interim we will look to seek agreement on other matters and revisit the pay offer in the context of the whole Enterprise Agreement package.
Overall, we are following the below process:
- APS-wide bargaining aims to improve commonality in pay and conditions across the APS, including a pay rise for APS employees.
- Agency-level bargaining enables agencies to negotiate terms that are necessary to support their particular needs and operating model.
- APS employees will vote on their agency’s proposed enterprise agreement once – at the end of agency-level bargaining. This agreement will include common conditions negotiated during APS-wide bargaining.
The Chief Negotiator aims to move through this as quickly as possible, with the expectation that that most enterprise agreements be operational before the end of March 2024, with some finalised by the end of 2023.