State sector employees are being told they will not get pay increases unless they can be achieved through productivity gains.
Finance Minister Bill English told Parliament on Thursday that any pay increases in the state sector would have to be met with gains in productivity.
Mr English said the Government has given the public sector 12 months' notice to prove that productivity has increased sufficiently to justify pay increases.
Asked whether he was signalling to teachers and nurses that they can expect no pay increases when their collective contracts expire next year, Mr English said their jobs are among the most secure in the country.
Both the Nurses Organisation and the NZEI, which represents primary and early childhood teachers, say they are surprised by the comments.
NZEI president Francis Nelson said the comments are highly unusual - particularly as they come a year ahead of negotiations, which are scheduled to start in June 2010.
The Nurses Organisation says Mr English is acting in bad faith.
Labour's state services spokesperson Grant Robertson says it is very difficult to apply rigid productivity measures to complex areas like health and education.
Mr Robertson says everybody in the state sector recognises that these are tough economic times.
Mr English says turnover rates within the public sector have dropped to historical lows.
