President Obama has limited pay rises for tens of thousands of federal employees in the US next year to 2 per cent, blocking planned rises of more than 18.9 per cent.
The President said in a letter to Nancy Pelosi, Speaker of the House of Representatives, that pay formulas set in 1990 would indicate a 16.5 per cent pay increase, on top of a 2.4 per cent cost-of-living increase for federal employees.
This would cost $22.4 billion, and place too much strain on the already stretched federal budget, the President said.
“With unemployment at 9.5 per cent in June, to cite just one economic indicator, few would disagree that our country is facing serious economic conditions affecting the general welfare,” he added.
Citing the “national emergency” declared after the terrorist attacks of September 11, 2001, he invoked his right to use an alternative formula, keeping pay increases to 2 per cent, the level he called for in his budget this year, costing taxpayers $2.7 billion next year.
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The National Treasury Employees Union, said it was disappointed with the decision.