Pay rise a promising first step but further increase needed

Approximately 320,000 aged care workers have been awarded a 15% award wage increase by the Fair Work Commission (FWC), however, many in the industry are concerned that it might not be enough to attract and retain staff.

The FWC handed down the interim decision last Friday, with hourly rates set to increase by approximately $3.60 per hour, depending on the award level. It means a full-time worker could pocket an additional $7,000 per year.

As part of the decision, The FWC concluded there is a wage gap between aged care staff and healthcare staff who perform similar tasks in the acute health sector.

It acknowledged the bulk of the aged care workforce is not receiving an appropriate wage that reflects the importance of their role and that the care needs of older Australians have become more complex over the past 20 years. 

The FWC also stated that care work “has been historically undervalued and the reason for that undervaluation is likely to be gender-based”, and Anika Wells, Minister for Aged Care, addressed the importance of this pay rise for women working in aged care.  

“We need to bring workers back to the aged care sector and fill the staff shortages caused by nine years of neglect,” Minister Wells said.

“One of the main causes of the gender pay gap is low pay and poor conditions in care sectors like aged care, where the majority of workers are women. 

“Increasing wages in aged care is essential to ensuring that men and women are paid equally.”

Whilst the wage increase is good news for some workers, not all staff are slated to benefit from the decision. Workers in administration, kitchen, laundry or maintenance won’t see an increase in their paycheck.

Only staff in the direct care classifications of the Aged Care Award, Social, Community, Home Care and Disability Services (SCHADS) Award, and nurses working in aged care covered by the Nurses Award, will receive a 15% pay boost under the Stage 1 review of modern awards.

Grant Corderoy, Senior Partner at StewartBrown, said the increase is justified but he’s unsure if it will be enough to attract new workers.

“The effect of a 15% increase on workers is that it will help retain them. Aged care staff retention, like many sectors, is at a critical staff shortage,” Mr Corderoy said.

“The big advantage for the providers is that as long as it’s fully funded it will provide them with the power to attract and retain staff which is the biggest issue at the moment. 

“But whether this will actually attract new staff is questionable, we feel the figures should be closer to the 25% mark, which is a better figure to both attract and retain staff.”

Mr Corderoy said the ruling could lead to friction in the workplace between staff that have and have not been included in the award raise.

He raised concerns about who will cover an estimated $140 million worth of additional costs such as superannuation leave entitlements, payroll tax and workers compensation premiums.

“If the on-costs are not fully funded by the Government, it’s going to cause further financial stress on the sector,” Mr Corderoy added.

“And if they have to fund a pay rise for the workers that are not covered by the increase that’s also going to place a strain on them. The likelihood is they will have to pass on a similar increase to the other workers.” 

The FWC will determine when the wage increase is phased in during Stage 2 of the review, which reportedly “will commence shortly”.

Support and administrative staff may benefit from a pay rise increase in Stage 3, the final stage of the review process, as the FWC did not find the evidence to be clear or compelling enough to provide a wage increase currently.

The FWC will also reevaluate the merits of the full 25% wage increase when they provide a detailed consideration of award classification definitions and structures. 

Industry wants to see 25% increase approved

Early reactions to the interim pay rise have been mixed, with most providers and industry experts supportive of the decision but hopeful that more is to come.

Chris Mamarelis, Whiddon Chief Executive Officer (CEO), welcomed the wage increase as a positive sign, but he had hoped for more immediate benefit after a year of planning and submissions.

“I am disappointed that at this juncture, there are no immediate benefits to our employees take home pay,” Mr Mamarelis said.

“Rather, we are forced into another holding pattern while we await further hearings to conclude. 

“The employees I have been speaking to have been hopeful for a positive result, they have worked incredibly hard under trying conditions throughout the pandemic and therefore they should be prioritised.”

Mr Mamarelis expressed additional disappointment at the fact that not all employees will receive a pay rise. He said it sends a message that they are undervalued.

“The people who prepare meals, provide domestic support, maintain our homes, and support the wellbeing and leisure needs of our residents deserve better,” he said.

“Sadly, Whiddon support and hospitality employees heard about the 15% increase via the news on Friday night and believed that the increase would apply to them. 

“We now have to communicate to our people that unfortunately it doesn’t, and the Fair Work Commission is going through another process to determine their remuneration.”

He hoped the FWC will recognise the impact a “once in a lifetime structural change” will have on all aged care employees and provide a widespread 25% pay rise in 2023.

Mike Baird, HammondCare CEO, said the wage increase will help attract workers and recognises the value of existing staff, and he looks forward to future announcements.

“These workers have shown extraordinary commitment through the pandemic, working in difficult conditions, protecting those in their care who were especially vulnerable,” Mr Hammond said.

“It is great that the Federal Government has committed to funding in full the cost of this measure.

“The decision is only the beginning. There is more work to do.

“The interim decision does not preclude further increases being granted either across additional classifications for administrative and support roles or to those already granted an increase by this decision.”

There is a widespread belief that this decision is just the first step for the FWC, as Sarah McLelland, Aged Care Workforce Industry Council (ACWIC) Interim CEO, said they were keenly awaiting the next announcement.

“This interim pay increase of 15% for direct care workers is a positive step, but it’s not enough,” Ms McLelland said.

“Aged care workers have routinely gone above and beyond, continuing to deliver care through trying circumstances, and their work should be properly valued.”

Ms McLelland said increased wages need to be supported by other initiatives to attract and retain aged care workers, and the ACWIC will continue to provide new solutions to help.