The independent Industrial Relations Commission of NSW found the nearly 70,000 employees were entitled to a pay bump over three years, with a significant hike in the first year backdated to July 2025.
"The work of nurses, midwives and assistants in nursing are currently undervalued, and they deserve as a result a one-off increase," the commission's president Justice Ingmar Taylor said on Thursday.
"They are essential, integral and irreplaceable to the system's function and effectiveness."
Over a three year period, registered nurses and midwives are now set to receive 16 per cent, 18 for enrolled nurses, and a whopping 28 per cent for nursing assistants.
The two subsequent years of the agreement will see three per cent annual increases.
The last major arbitration of nursing wage rates was more than two decades ago.
Health Minister Ryan Park said it was a "really positive day for NSW healthcare workers."
But reaction from the NSW Nurses and Midwives' Association was not overly jubilant.
"Today's announcement gives a historic record-breaking pay deal ... but registered nurses and midwives remain behind those in other states," the union's head Michael Thwaites told reporters outside the commission.
Annual salaries for registered nurses in the state start the $87,000 mark which falls well behind nation-leading ACT at $103,000 followed by Queensland at $94,000 and Western Australia $91,000.
Nurses and midwives make up about half of all employees of the NSW health service with 90 per cent of them women.
Justice Taylor said the gendered nature of the profession was a factor in how employees had been financially overlooked for decades.
"Nurses and midwives perform invisible skills and there is at least a real possibility that their work is undervalued for gender reasons," he said.
For midwife Christie, the commission's  recognition was well-received but did not go far enough with the figures falling short of the union's demands of a 35 per cent increase.
"As a mother raising two girls here in Sydney - it's tough," she told reporters.
"We're just looking for more from this government and we won't stop asking for it. We deserve it."
Treasurer Daniel Mookhey hailed the decision, which took two years since arbitration started, as a "fair outcome for all parties" trumpeting changes the Labor government ushered in by re-instating the independent labour umpire.
"No one got everything they wanted here," he said at a press conference.
He said the upcoming budget will be able to handle the billions to be paid out to the nurses and midwives without specifying a dollar amount.
The annualised workforce cost is about $7.5 billion.
"Nurses and midwives are the DNA of the NSW health system," Justice Taylor said in his judgement.
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