The Australian Medical Association warned the move would deter doctors from working in Tasmania.

AMA Tasmanian president Dr Tim Greenaway said public hospital doctors have not had a pay increase since December 2011 and have taken their case to the Industrial Commission.

"The failure of the government to offer competitive working conditions means we are constantly losing doctors to the mainland states," Dr Greenaway said.

"The current award covering public hospital doctors in Tasmania is outdated and uncompetitive and has resulted in excessive locum costs and special deals for some doctors which are simply not affordable in the long- term."

The government is actively considering a 12-month wage freeze before allowing 2 per cent annual increases for the state's 30,000 public servants in a bid to minimise job losses.

The move is estimated to save $50million and reduce the number of job losses by up to 500 full-time employees.

New legislation would be required to override the authority of the Tasmanian Industrial Commission's role as the independent arbiter of industrial awards.

"Such an action is unprecedented in recent times and would spell the end for negotiated industrial agreements in the state," he said.

The Community and Public Sector Union is planning to brief its members and has not ruled out taking industrial action.