Raraunga Ohumahi 2022 — Taiutu kaiārahi matua Workforce Data 2022 — Senior leader remuneration/pay

Average salary changes by seniority

In 2022, the average base salary for the workforce at public service departments and departmental agencies increased by 3.7% (we use base salary because we don’t collect total remuneration in Workforce Data.) The increase for non-management staff was 3.2%, compared with 1.6% for management staff. By tier, average salary showed increases of 2.6% for tier 2 managers, 3.3% for tier 3 managers and 2.6% for other managers. The average salary for chief executives (tier 1 managers) increased by 1.3% over the same time.

When looking at the chart below, two other points to note for chief executives (tier 1 managers) are:

• The 7.6% increase in 2019 was due to a change introduced to chief executive remuneration packages. This was an adjustment rolled into base salary to account for the removal of performance, or at-risk payments which were outside of base salary. The chart shows estimated average size of these at-risk payments that sit above the base salaries for the preceding years.
• In response to COVID-19, all public service chief executives adopted a voluntary 20% reduction in pay, effective for 6 months from 11 May 2020. The reversal of this reduction resulted in incumbent chief executives seeing a 19% increase in 2021.

Average salaries for chief executives can fluctuate over time, because of the small number in the group and the effect of compositional changes due to arrivals and departures each year. The sections below have more detailed information on chief executive remuneration.

Average salary ratios

The chart on the first tab of the visualisation below shows the ratios of average base salary for the 4 management levels compared to non-management staff. These ratios have been quite stable over the last 6 years, except for the chief executive group. As at 30 June 2022, the average base salary of incumbent chief executives in the Public Service was 5.3 times that of non-management staff.

This ratio had been trending downwards, once you take into account the change introduced to chief executive remuneration packages in 2019, with an adjustment rolled into base salary to account for the removal of performance or at-risk payments (which were outside of base salary). The effect of this is estimated in the chart below. The sharp drop in 2020 was due to public service chief executives adopting a voluntary 20% reduction in pay, effective for 6 months from 11 May 2020. The increase in 2021 was due to the reversal of this reduction.

The ratios for other management levels were:

• tier 2 manager at 3.6
• tier 3 manager at 2.5
• other managers at 1.6 times relative to non-management staff.

When comparing the average base salary of chief executives to the rest of the staff (including managers) the ratio was 4.8. This ratio has been trending downwards in recent years.

These public service chief executive and staff pay ratios are modest compared to the market ratios of publicly listed New Zealand firms. A 2021 Stuff survey of the largest 20 companies in the benchmark NZX50 found that chief executive pay was between 16- and 40-times worker pay.

2021 Survey results on NZX50 chief executive pay — Stuff.co.nz

For more information, see Chief executive remuneration overview