Labor push to delay aged care pay rise over worker shortage fears

Financial Review, 14 April 2024

The Albanese government is seeking to delay aged care workers’ wage rises of up to 13.5 per cent by almost two years due to concerns a large pay jump could fuel labour shortages by attracting workers from other sectors.

The government told the Fair Work Commission late on Friday that it was committed to funding the pay increases for an estimated 250,000 direct carers but wished to phase them in as two halves on January 1, 2025 and January 1, 2026.

Health unions have responded in anger to the proposal and argued delays would heap more pressure on the aged care sector to retain existing staff.

But, according to the government, there are substantial shortages of hospital nurses, disability carers, and childcare workers who have “substitutable skills” with aged care workers.

“In this context, the Commonwealth considers it prudent to adopt a phased approach to the funding of large one-off wage increases, particularly where large wage increases may draw workers from other sectors of the economy that also face employment shortages,” its submission said.

“Further, the Commonwealth funding commitment has been made in the context of its fiscal strategy, which is focused on improving the budget position in a measured way, consistent with the overarching goal of reducing gross debt as a share of the economy over time, while seeking to deliver relief from cost-of-living pressures without adding to inflation.”

The FWC awarded carers pay rises of between 2 per cent and 13.5 per cent in March in recognition of historic underpayments of gendered roles. Accountants estimate the increases will cost the federal budget $3.3 billion over the next four years.

The decision followed a 15 per cent interim increase last year for carers at a cost to the budget of $11.3 billion over the four-year estimates.

Health Services Union national president Gerard Hayes said the government’s position, if accepted, would mean aged care workers would be waiting six years for their full pay rise given their work value case had started in 2020.

“We’re not talking about getting a few more people into the sector – we’re talking about stopping the hemorrhaging of people leaving,” he said.

“A phasing program will maintain more pressure on the sector as opposed to what’s really needed – to attract and retain.”

The government’s submission says that, as of February, job vacancies in the health care and social assistance industry were 118 per cent higher than pre-pandemic levels and have remained at that level in recent quarters.

By contrast, job vacancies in the rest of the economy were only 49 per cent higher than February 2020 and had started to soften.

United Workers Union aged care director Carolyn Smith confirmed that early childhood workers were moving into aged care in response to last year’s 15 per cent increase and even some of the sector’s cooks and cleaners had become carers.

“That has been happening, there’s no doubt,” she said. “But the obvious answer to all these things is not slow it down but pay everyone what they’re worth.”

The UWU is currently pushing for a 25 per cent increase for childcare workers, to be funded by the government, as part of multi-employer bargaining.

However, Mr Hayes disputed the government’s argument that disability carers – who received up to 45 per cent [pay rises from 2012 to 2020 on equal pay grounds – might transfer over as he said aged care had been paid below comparable sectors.

“With the full increase they will become somewhat competitive in public health,” he said. “It’s an oxymoron to say that their wage gain would be at the disadvantage of other groups.”

He said he was seeking to talk to the government about its proposal “as a priority”.

The government’s submission supported non-direct carers, including cooks and cleaners, getting their pay increase of 7 per cent at the start of 2025.

However, the commission will be last to decide on a date. Last year, it fixed the 15 per cent increase from July 1 despite the government pushing for a 12-month phase-in period at the time.