The effects of capping public sector wages could spread to all workers, Unions Tasmania says.

In 2011, the Tasmanian Government introduced a two per cent cap on wages for government workers.

Union secretary Jessica Munday says it is time to scrap the cap, but Treasurer Peter Gutwein says it is still serving its purpose.

“Public sector employees wages will increase again this year in line with our wages policy which is responsible and sensible and remains at 2 per cent,” Mr Gutwein said on Monday.

Ms Munday says it is not just impacting the public sector.

“The public sector wages cap is hurting all of us,” she said.

“There's 28,000 state service workers who are subjected to a cap - and have been since 2011 - of just two per cent which is effectively seeing their wages go backwards.

“But the government is getting away with having a cap and not being held to account for the consequences that has for the private sector economy here.”

Ms Munday said unions are largely unable to negotiate for pay rises above two per cent in the private sector.

“There is not one union who hasn't been told by an employer that their wage offer is two per cent because that's what the government offer,” she said.

“It is an absolute brake on wages growth.

“It doesn't matter to some employers if their productivity us up or their profits are up, they will say it's two per cent or nothing.”

Tasmanian Chamber of Commerce and Industry chief executive Michael Bailey denied the connection between the public and private sector.

“In fact our members have commented for years that often the pubic sector prices them out of workers,” Mr Bailey said.

“We find that public sector roles, when you take into account superannuation, tend to be above average and can drain workers from the private sector.

“We have not had a member link their proposed wage increases to the public sector -  my IR resources tell me they have never had this used before.”

Mr Bailey suggested a “root to branch” review of the state service.