The NSW premier says he is working to respond to the state's public service union "very shortly" after it threatened a strike over pay rise demands.
On Tuesday, the union said 40,000 public service workers would walk off the job on Wednesday next week unless the government committed by Monday to a pay rise of 5.4 per cent.
The demand from the Public Service Association follows industrial action and strikes from the unions representing nurses, teachers, public transport staff and other government employees, all of whom seek a pay rise.
"You'll see an announcement very shortly in relation to that," the premier said on Wednesday.
"We know that there are challenges in relation to wages in a high inflationary environment."
The premier said potential pay rises for public sector workers were currently being costed by the government.
Employee-related decisions were generally made last during the finalising of a state budget, the premier said.
"It needs to be kept in the context of the entire pressures under the (June 21) budget."
The premier said public sector wages were stronger in NSW than other states.
"Look around the country, Victoria, one and a half per cent, New South Wales two and a half per cent, WA have frozen wages for the last how many years, whilst living off the rewards of the great GST deal that they achieved at the expense of the people of New South Wales and Victoria.
"Here in our state, we've always kept wages at two and a half per cent, except that one time at the start of the pandemic.
"We've always led on wages and we will lead again."
However, the union says workers have fallen behind and public sector pay increases have been capped at 2.5 per cent since 2011.
The cap is operating as a wage cut in real terms due to current high inflation, PSA general secretary Stewart Little said Tuesday.
"Now (workers) are being asked to cop inflation too - something has to give," he said.
The PSA represents workers including prison officers, park rangers, school support staff, ServiceNSW workers and civilian police employees.
Mr Little said if the union does not receive a compelling offer on Monday, public service workers will strike next Wednesday.
"Public sector wages get pumped straight back into the economy and stimulate growth, particularly in regional NSW," he said.
"They also set the benchmark for wages generally.
"As the largest employer in the country, Premier Perrottet has more power to fix Australia's wage crisis than any other leader."
