The Fair Work Commission has awarded NSW rail workers a pay increase above the government's public-sector wage cap to prevent a "significant decline" in real wages.
All rail workers will receive an additional 1 per cent backdated to May 1, 2022, and another 1 per cent from May 1 this year.
This is on top of the 3 per cent pay increase for public-sector employees the NSW government provided last year for the period covering 2022 to 2024.
The government also said a further 0.5 per cent would be possible between 2023 and 2024 for employees who made a "substantial contribution" to productivity.
At the time Treasurer Matt Kean described the increase as "fair and sustainable" in the economic climate.
However the Fair Work Commission today concluded the government's increase represented a "significant decline" in real wages.
The judgement said the increase would be inadequate towards the end of the agreement due to the effects of spiking inflation.
It also concluded the additional wage increase would cause no "discernible detriment" to the NSW government's budgetary position.
"Total employee expenses for the rail entities only constitute 1.6 per cent of total NSW government expenses [so] it is not possible to conclude that any reasonable outcome of this arbitration will detrimentally affect the NSW government's finances to any significant degree," the commission ruled.
However the commission ruled a higher cleaning allowance should not be paid to customer-service attendants who were required to perform cleaning duties.
The Rail Union argued these attendants now had to deal with more hazardous waste rather than just basic rubbish at stations, meaning they were cleaning vomit, blood and faecal matter more frequently.
However the commission did not accept there had been a "sharp increase" in the amount of hazardous waste cleaning they were performing and said it would be inequitable because cleaning attendants and cleaners in charge dealt with hazardous waste "far more frequently and intensely".
"Consequently, it would not be fair for [customer-service attendants] to receive the [allowance] on a per-shift basis in the same way that cleaners do," it said.
The public-sector cap has been a key issue during campaigning for the NSW election, which will be held in just over two weeks.
Labor has proposed scrapping the cap altogether, arguing it puts a handbrake on productivity and forces workers to leave NSW for better wages in other states.
The Coalition said this would blow an almost $9 billion black hole in the state's budget, according to analysis from NSW Treasury.
Secretary of Unions NSW Mark Morey said today's decision left the credibility of the government's pay policy "in tatters".
"The Fair Work Commission is independent of politicians," he said.
"Its experts have assessed the evidence and outright rejected the stingy approach of [Premier] Dominic Perrottet, instead awarding a pay rise that goes further in easing the strain on family budgets
"An extra 1 per cent a year will make a significant difference. For many, it will be the difference between paying for school excisions or a modest summer holiday."
The ABC has contacted the office of Transport Minister David Elliott.
