About half of the country's roughly 320,000 state sector employees are to get a pay rise this year, but the rest may not get anything.
The Government has put a freeze on extra money to pay for new wage settlements.
Wage increases negotiated last year or the year before are not under threat.
But Finance Minister Bill English says there is no extra money for wage deals negotiated this year.
Mr English says that if departments agree to any new wage increases they will have to fund them out of their existing budgets.