Pay Bands for Contractors in the Public Sector?

Published: 
June 22, 2021

Written by

Nathan Masters

General Manager

It’s not uncommon for employees to get paid within pay bands - but is there a chance that the public sector could look at a cross agency pay banding for contractors?

Pay bands for contractors in the public sector?

I heard this whisper a little while back and then read an article via NZ Herald that it may become a reality.

It’s not uncommon for employees to get paid within pay bands - but is there a chance that the public sector could look at a cross agency pay banding for contractors?

For example, a Project Manager who wishes to work in central government will be able to earn between $100 - $120 per hour, or, a Senior Project Manager who wishes to work in government govt will be able to earn between $120 - $140 an hour (those numbers are purely there to highlight the example).

I get the thinking if this was in play and the fact that government need to be accountable for what they spend on consultants and contractors.

However, I suspect there is going to be a fair number of exceptions made if this gets rolled out.

If a consultant / contractor is a known, trusted, respected resource who has a track record in delivering and they fall above a pay band for a government department who has used them before and wants them back, do they go looking at an Option B or Option C when they know exactly what they are going to get with their known and trusted resource?

Wellington is fortunate to have central government located here, and there has been a mature contractor market for as long as I’ve been doing what I do.

BUT - if these new pay bands for contractors are implemented across each government agency and they are below ‘market rates’ it will be interesting to see what happens.

Do the likes of the banks or the tech shops benefit as top talent will go elsewhere such as a bank where they can continue to earn what they think they should earn?

On the flip side I think what MBIE are doing will give visibility among government departments on who is paying what for certain roles types. For example, we might see aberrations where one or two government departments are paying above the average for a Business Case Writer and if there is no apparent reason why they are doing this, it may offer them the chance to reduce that cost if the data is showing that 95% of other departments are paying between X and Y and they are paying Z.

What are your thoughts on pay banding for contractors?