Wellington, Nov 18 NZPA - Some state pay settlements this year are likely to feature lump sum increases instead of percentage pay hikes, State Services Commissioner Iain Rennie told MPs today.

Mr Rennie told Parliament's government administration select committee that wage rises in the state sector would have to reflect "lengthy period of fiscal restraint".

There had been no instruction for a zero increase wage round and each organisation and sector would be treated on its merits.

Mr Rennie confirmed that the total bill for chief executives' salaries would be frozen.

This came after many senior civil servants recorded substantial pay increases in the first half of the last financial year.

Mr Rennie said the Government wanted wage rises tied to productivity gains and a shift of resources from back office functions to frontline services, though there was no hard and fast definition of what this meant.

Former state services minister David Parker asked whether departments were looking at giving out lump sum increases and not percentage pay rises.

Mr Parker said the percentage pay increases put more money in the pockets of higher income workers and proportionately less to those on lower incomes in the same department.

Mr Rennie said it was "part of the mix" and he would not be surprised if there were one or two along those lines in the coming year.

All government agencies were living with the same amount, or less money than last year, and wage restraint was needed throughout the organisations, he said.

There must be a period of "wage restraint" which was different to a wage freeze.

There had been a huge turn around in wage increase expectations since the international credit crisis and resulting global recession, which had led to some industrial action in the sector, Mr Rennie said.