Finance Minister Bill English has warned there will be "tension" between public servants and their employers, with ongoing restraint on wages despite a Budget return to surplus and productivity gains.
Members of the Public Services Association (PSA) at the Ministry for the Environment (MfE) went on strike this morning, over a "miserly" offer of a 0.5 per cent pay increase.
PSA National Secretary Richard Wagstaff said staff at the ministry wanted fair pay as the economy improved.
"Our 120 members at MfE are asking for fair pay, especially as the economy has started to improve."
English said "naturally" workers expected wage increases in a growing economy, and Treasury was forecasting that wages would rise faster than inflation.
But this did not mean there would be less pressure for savings on the public sector.
"In the public sector, as you can see, the Government hasn't changed its spending habits, so it's still pretty tight," English said.
"Government agencies have done a pretty good job of finding better ways of doing things, producing better results. They've actually held up their numbers up pretty well, [but] as there's pressure for wage increases, they might need to look at more efficiencies as well."
English said given recent history, he expected "tension" between public servants and their employers.
"These are people who have worked hard," he said.
"They have produced more for less right across the public sector. They might have expected the Government would be lifting the lid once it got to surpluses, but actually we get to surplus because we're keeping the lid on it pretty tight.
"So no, it wouldn't be a surprise if there was some tension."