Covid-19 means salary freeze for the next three years for PM and politicians

The Prime Minister and other politicians will not get a raise for the next three years, the Remuneration Authority has just revealed.

The Remuneration Authority has released MPs’ pay rates for the next three years today, and decided not to give them any increases, citing Covid-19 economic conditions.

The pay of the deputies has not moved since mid-2017.

Prime Minister will remain with $ 471,049 a year and Opposition Leader Judith Collins with $ 296,007.

Ministers earn $ 217,676 and support and opposition deputies receive just under $ 164,000.

The Compensation Authority said it had considered economic conditions and decided they were unlikely to improve significantly during the three-year period for which it had to set wages.

However, he said there was a “marked change in the economy” that could make a change in the future.

The Remuneration Authority said it considered expert advice from a variety of sources, including the Reserve Bank and the Treasury.

“After taking into account the advice received regarding possible changes in the economic situation in New Zealand, the Authority could not find convincing evidence indicating when the economy could recover to pre-COVID levels, regardless of some good economic news. Recent “.

Therefore, he decided to keep MPs’ salaries at 2017 levels until the next election, but noted that a significant shift in the economy could result in a review.

A spokesman for the Prime Minister said he had urgent restraint in a presentation to the Remuneration Authority.

“She supported salary moderation and the independence of the Authority to make these decisions.”

A six-month pay cut that MPs took in solidarity with other workers during Covid-19 is still in effect, but will end on January 6.

That was after a request from the Prime Minister, and backed by opposition MPs, who cut the salary of ministers by 20 percent and normal MPs by 10 percent.

Despite the Prime Minister’s request for restraint, the Remuneration Authority has to weigh other factors, including maintaining relativity with the salary received by those in other professions, job demands and economic conditions.

For the first time, the Compensation Authority has had to set salaries for each of the next three years until the next election, rather than make annual adjustments.

He had to start that process within three months of the election.

The change made by the government helps to avoid the Christmas blushes of politicians when the announcement is made each year.

In 2018, the Prime Minister froze salary rates for a year instead of taking a 3.08 percent increase calculated by the Remuneration Authority that year.

The government then changed the formula the Compensation Authority used to calculate salary changes, rescinating former Prime Minister John Key’s 2014 decision to link MPs’ salary increases to the average salary increase in the general public sector.

That was an attempt to end big pay increases, which attracted public shame, but ended up generating healthier increases than expected.

The job has now reverted to rules under which the Remuneration Authority must take into account a number of issues, including the economic environment and what people are paid in other professions.

The most recent determination of the authority was approved in June this year and applied retrospectively from June 2019 until the elections, but did not change the salary of parliamentarians.

The Remuneration Authority noted that Covid-19 was having an “immediate and unprecedented impact on the New Zealand economy,” but said it was difficult to measure at the time.

He said he would not know the extent of the recession New Zealand is facing until economic and labor market indicators for the June 2020 quarter are released.

From 2014 to 2017, salary increases ranged from 2.5 to 4 percent.

By contrast, in the immediate aftermath of the global financial crisis from 2011 to 2014, increases were 1.7% on average.