Railway workers were awarded a wage increase above the wage ceiling by the Fair Work Commission, dealing a blow to the Perrottet government

NSW railway workers are getting a pay rise above the state’s wage cap after the industry arbiter found the current limit could result in a “significant drop” in real wages, which would be a major blow to the Perrottet Government.

The Fair Work Commission on Friday awarded rail workers an extra pay rise of 1 per cent for 2022 and 2023 after a year of protracted negotiations and industrial action across Sydney’s public transport network.

The decision means workers will retrospectively receive a 3.5 percent wage increase from May 2022 and a 4 percent wage increase from 2023. The government wage cap is 3 percent with a potential increase of 0.5 percent for productivity savings.

The government negotiated a wage agreement with the rail union just months ago of 2.5 per cent for 2022 and 3 per cent for 2023, but both sides have also agreed to let the Fair Work Commission arbitrate elements of the deal at a later date.

The decision comes just two weeks after the state elections and after NSW Prime Minister Dominic Perrottet warned that a Labor government raising his wage cap would blow a hole in the state budget.

In a 52-page ruling published on Friday afternoon, the Fair Works Commission found the government failed to demonstrate that a wage increase above the much-vaunted 3 per cent wage ceiling would cause “discernible detriment” to NSW’s budget.

“No evidence has been presented, nor is it alleged, that a wage increase in excess of that provided for in the 2022 agreement would cause any difficulties for the commercial or financial position of the railway companies or for the budgetary position of the NSW Government,” the ruling said .

NSW Unions Assistant Secretary Thomas Costa said Friday’s decision was a big win for rail workers and would encourage other public sector workers to campaign for higher wages.