Australian Public Service (APS) employees at the lowest pay levels may receive a special salary increase to address pay gaps within the public sector. 

A proposal, put forth by the Public Service Commission this week, aims to rectify the issue of “pay fragmentation” which has resulted in significant salary discrepancies among employees in similar roles.

Labor promised to tackle this problem during the previous year's election campaign, noting that Indigenous staff, particularly those working in Aboriginal Hostels and the Australian Institute of Aboriginal and Torres Strait Islander Studies, as well as employees in cultural institutions like museums, were disproportionately affected.

Currently, the pay gaps for common job levels in the APS are substantial, with discrepancies as high as $27,265 for APS level 6 officers and $34,168 for executive level 1 (EL1) officers. 

These gaps have been widening gradually since the 1990s when agencies were given the authority to negotiate their own enterprise agreements, resulting in the end of whole-of-government pay deals implemented by former prime minister Paul Keating.

Under the commission's proposal, a new minimum base salary would be established for each job level, exceeding the current minimum. 

Employees earning below this new minimum would receive a top-up increase in addition to the proposed 4 per cent pay rise for all APS staff. 

Peter Riordan, head of the commission's workplace relations bargaining taskforce, expressed confidence that this initial step would reduce average APS pay fragmentation from 26 per cent to 18 per cent. However, he cautioned that addressing pay gaps would require time.

It should be noted that the proposal would affect a relatively small number of employees. 

At the APS6 level, only 17 workplaces have base salaries below the proposed new minimum ($86,018), including the Department of Home Affairs and the Bureau of Meteorology (BOM). At the EL1 level, there are just six workplaces falling under the new minimum ($105,011), with the exception of the BOM, all of which are small agencies.

The Community and Public Sector Union (CPSU) expressed the view that the proposal should go further in achieving pay equity. 

Melissa Donnelly, the CPSU national secretary, says there is a need for substantial progress in this round of negotiations and urged for a more ambitious approach to address the pay inequities that have arisen across APS agencies.

Earlier this month, the government made its initial pay offer to approximately 160,000 APS staff, suggesting a pay increase of around 10.9 per cent over three years. 

If the government's forecasts are accurate, this would amount to a real-term pay rise of approximately 2 per cent after accounting for inflation. However, employees would still earn less than they did last year in real terms.