Historic pay rises start tomorrow

30 June 2017

The historic and long-awaited pay jump for aged care and community caregivers comes into affect tomorrow – five years after the landmark pay equity case was filed.  But debate continues, reports INsite magazine, over whether the cost of the 15 to 50 per cent pay rise will be fully funded by the government.

There is also ongoing concern from enrolled nurses and registered nurses in the aged care sector about the loss of pay relativity with their unregulated co-workers (see earlier story).  

Health Minister Jonathan Coleman said tomorrow was an historic day with the $2 billion pay equity settlement resulting in 55,000 care and supported workers in aged and disability residential care, and home and community support services receiving receive pay rises of between 15 and 50 per cent. The 20,000 workers currently on the minimum wage of $15.75 an hour would receive a 21 per cent pay increase to $19 an hour – around an extra $100 a week for a fulltime worker.

Also from July 1 a health care assistant (HCA) with 12 years experience or an approved level four certificate would receive $23.50 an hour – more or the same as many experienced enrolled nurses or a new graduate registered nurse working in residential aged care.

Lead Maternity Care (LMC) midwives will also get a six per cent fee increase from July 1 that comes on top of a 2.5 per cent increase in 2016 and 2 per cent in 2015. The six per cent increase follows midwives withdrawing their pay equity High Court claim and the Ministry of Health agreeing to ongoing negotiations to re-design the funding model for the midwifery-led maternity system using pay equity principles.

Union E tū, which lodged the initial Kristine Bartlett vs Terra Nova pay equity case in 2012 that lead to the settlement, yesterday hit back at claims that that the pay equity settlement for care and support workers in aged care would not be fully funded by Government.

In a statement it said the Government's intention was to fully fund employers for the direct costs of the settlement and for employers to receive additional funding towards offsetting the additional costs imposed by the legislation.

Nursing Review's sister publication INsite yesterday reported a mixed response from employer groups in the sector to the E tū statement. (See original INsite story here or read on below.

INsite editor Jude Barback reports: funding debate responses

New Zealand Aged Care Association (NZACA) chief executive Simon Wallace said he agreed that the government’s stated intention was to fully fund the pay equity settlement.

“But the reality is that this isn’t the case for around a quarter of our membership.”

The NZACA’s stance hasn’t changed from its submission to the Select Committee on the underpinning legislation. The submission discussed a “new reality” for some providers following the settlement, which would see some post operational losses, make staff redundant or even close.

It’s a similar response from the Home and Community Health Association. Chief executive Julie Haggie says they have just learned two days out from implementation that pay equity will not be fully funded for this year or next for the home and community support services sector.

“It doesn’t surprise us, but it saddens us,” says Haggie.

“It is going to be incredibly destabilising for our sector. How do we plan for the future?”

Haggie says many providers will be left with no choice but to restructure in order to meet the costs.

“The outcomes, if we don’t get funded, are going to be really bad for clients.

“We will definitely be challenging the Ministry on this,” says Haggie.

However, E tū maintains the legislation will protect providers. It points to the relevant clause in the legislation that states that a funder must pay an employer “additional amounts over and above the amounts required by the funding agreement towards offsetting the additional costs faced by the employer as a result of this Act”. The legislation says that in determining what constitutes an additional amount, the funder should take into account the increased wage costs, training costs and “any other matter that the funder considers appropriate”.

E tū says it has raised the concerns of smaller providers with the Ministry of Health and confirms the Ministry is working to ensure they are not jeopardised by the settlement.

Wallace confirmed that over the course of July the Ministry would work to support those providers who might struggle with the wage increase.

“There is a process in place working with the Ministry to support those operators that are finding this tough.”

Wallace said members he spoke with yesterday in Auckland were reassured by this.

In another step taken by Government to smooth the path for providers, funding has also been provided three months in advance to employers, with audits then carried out to ensure the funding – particularly for smaller employers – is sufficient to meet the legislative commitments.

However, Victoria Brown of Care Association New Zealand (CANZ), which represents many smaller residential aged care providers, said that in spite of the advance payment, members were finding it “very daunting”.

“As the Ministry decided to pay on occupied beds and only pay for those that are on the ARRC contracts and not the others, there is just not enough money to pay the tab,” she says.

“We have been given a three month advance payment but this has been averaged as well over the last six months’ occupancy. I don’t think there is anyone in our membership who is comfortable with this.”

Brown said while the cash advance was helpful in the short-term, it was the long-term that concerns providers.

She said providers were fearful of what the DHBs would do to them if they find they can’t afford to pay their increased wages bill.

“There is a clause in our contract that talks about insolvency. Will this be regarded as insolvency? If so will a provider have their agreement cancelled? The CANZ Executive is really concerned.”


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