NSW public sector workers will get a three per cent pay rise in the budget but it won't be enough to stop further industrial action.

Premier Dominic Perrottet flagged a three per cent wages boost for the next financial year, with another 3.5 per cent the following year depending on productivity gains.

The wage rise, above the 2.5 per cent cap imposed in 2011, comes after a swathe of recent industrial action and strikes from teachers, nurses, paramedics and other government workers.

The premier had forecast lifting the wage cap but warned it was unlikely to appease unions

Teachers Federation NSW president Angelo Gavrielatos said the announcement "adds insult to injury".

The wage rise is a pay cut in real terms amid high inflation, he said.

Public Services Association general secretary Stewart Little was in "furious agreement".

The union, representing government employees, voted to go ahead with a 24-hour strike on Wednesday that will involve workers walking off the job.

"Our members who work in prisons and schools for example have had their wages absolutely eroded with inflation," he told AAP.

In Sydney, thousands of workers are expected to rally in front of the NSW parliament to express their anger.

"Mr Perrottet has turned his back on them after all the heavy lifting they did during the pandemic," said Mr Little.

Unions say the wage cap should be scrapped, or lifted to at least keep up with surging inflation.

The wage cap has been in place for a period when inflation was mostly lower than 2.5 per cent.

Treasurer Matt Kean said the increase in wages was fair and sustainable in the current economic climate.

He said unemployment was at its lowest on record and maintaining competitive wages would retain talent, while expected economic growth would pay for the increase.

Opposition Leader Chris Minns said the lifting of the wage cap was "better than nothing".

"We still believe the current system of bargaining between public sector workers and the NSW government is fundamentally broken," he said.

"This confrontational approach that prioritises lawyers fighting it over in the industrial courts is not the way to go."

Existing frontline health workers will also receive a one-off $3000 payment in recognition of their efforts during the pandemic, Mr Perrottet said.

The payment does not cover departmental health staff like those that traced the spread of coronavirus, and Mr Little said the public service and other frontline workers would find it insulting that they would not receive a similar payment.

The NSW Nurses and Midwives Association's acting general secretary Michael Whaites said the payment would be a welcome relief but was not a long-term solution.

"This isn't going to help them with their cost of living pressures in two weeks time, or in two months time," he said.

The government has also announced plans to recruit 10,148 full-time equivalent staff to hospitals and health services across the state, as well as more than 1800 new paramedics.

Health Minister Brad Hazzard said the $4.5 billion investment over four years was intended to relieve pressure on existing staff.

Mr Minns said the government has recruited half of the nurses it promised at the 2019 election and would also face challenges recruiting the new staff amid a tight labour market.

Mr Whaites said recruiting additional nurses should not be challenging, noting there are close to 20,000 nurses and midwives who were registered but not practising.

"It's a furphy to say they won't be able to recruit the numbers, actually they won't be able to retain the numbers if they don't do something about the day-to-day workloads," he said.

Union members would be calling for further industrial action if the government did not address nurse-to-patient ratios, he said.