Thousands of teachers are striking on Wednesday in a bid for more pay and a reduced workload.
The NSW Education Department has listed 209 schools as "not operating" and parents have been urged to keep children at home as there will be minimal supervision at schools that are open.
Education Minister Sarah Mitchell says the disruption to students and parents caused by the strike is "frustrating and disappointing".
She had asked the union to cancel the industrial action after Premier Dominic Perrottet indicated he would lift the 2.5 per cent wage increase cap for public sector workers in the June 21 budget.
"We are actively looking at this as part of the budget and not just for teachers, but all our frontline staff and we made that clear," Ms Mitchell told the Nine Network on Wednesday.
"We understand cost of living and household budgets.
"We want to get the right result for our frontline staff.
"We're committed to doing that as part of the budget process."
Labor's education spokeswoman Prue Car accused the government of being out of touch with workers.
The government has created a new salary band for the chiefs of staff of some ministers, effectively giving them a 10 per cent pay rise, with the top salary increasing from $320,000 to $354,201.
Ms Mitchell said that figure was an upper limit.
"My understanding is that those bands are effectively like a limit on what can be paid to staff ... and there aren't any ministerial staff who are being paid at the top of that top band," she told Sydney radio 2GB.
Teachers are rallying outside NSW Parliament House as part of their campaign for two hours of extra planning time as well as a pay rise of between five and 7.5 per cent.
NSW Teachers Federation president Angelo Gavrielatos says unsustainable workloads and uncompetitive salaries are the main reasons teachers are leaving the profession.
Public sector pay increases have been capped at 2.5 per cent per annum for more than a decade.
Mr Gavrielatos says the promise to address wages in the budget was not a guarantee and teachers had been patient with the government in attempts to negotiate since February last year.
Ms Mitchell on Tuesday directed her department not to push ahead with a 2.04 per cent annual pay rise that was due to go before the Industrial Relations Commission next week.
Public sector workforce wage rises amount to billions of dollars and the government has competing priorities that need to be balanced, Ms Mitchell said.
"These are major decisions that should actually be made as part of a proper budget process, not in response to union demands," she said.
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