Government in New Zealand Experiencing $6 Million in Losses from Public Service Reductions
More than 2,000 individuals in New Zealand’s public sector have been laid off, and the downsizing is ongoing.
The New Zealand government has shelled out $6 million in redundancy payments to reduce the Ministry of Business, Innovation and Employment (MBIE).
These job cuts are a part of a broader reduction in workforce mandated by the tri-coalition government of the National Party, NZ First, and ACT, with ACT leader David Seymour leading the charge.
MBIE, a major government department with over 6,500 employees, has already cut 286 positions and plans to cut more. They have spent about $6.3 million on redundancy payments for 138 employees so far.
Nearly 2,000 positions across 19 departments have either been eliminated or are slated for the same fate. The final cost remains unknown as Finance Minister Nicola Willis has not requested an estimate.
Her office specified that funding for redundancy payments will come from the department and agencies’ existing budgets.
MBIE is the sole ministry that has disclosed figures for redundancies, while others claim that staff consultations are still ongoing, and thus the estimated cost remains unclear.
Average Redundancy $50,000
Based on data provided to Parliament’s Select Committees, Radio New Zealand estimated that the average redundancy payout for a public servant is around $50,000. This calculation was done by summing up redundancy costs across 10 agencies over four years and dividing by the number of staff affected.
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The exact amount individuals receive in redundancy payout hinges on their salary and employment agreement terms. Senior staff members are likely to receive more than junior employees.
The Public Service Commission noted a significant rise in senior leadership positions across the public service.
The number of tier-two managers surged by 69 roles or 41 percent between 2016 and 2023, with an average salary of $309,900 for the 236 tier-two managers.
During the same period, the number of tier-three managers grew by 323 positions or 42 percent. There are now 1,084 tier-three managers in the public service, with an average salary of $215,700.
Senior Managers in the Cross-Hairs
The minister clarified that senior managers are not immune to the cuts.
She mentioned, “I have been informed that certain restructuring proposals by public agencies include reductions in tier-two and three positions.”
“Nonetheless, I have tasked the Public Service Commission with monitoring the overall impact of these changes on senior roles compared to junior roles to maintain a balanced public service structure that benefits both employees and the public they serve.”
After presenting the Budget in May, Ms. Willis plans to assess the total number of tier-two and three positions relative to the public service workforce size.
“Following this evaluation, I will consider whether any adjustments are necessary,” she stated.
