Some aged care providers are “startled” by today’s news that their caregivers could have their pay increased to around $27 in five years, following today’s news that a settlement has finally been reached in the long-running equal pay case.

Many employees of New Zealand’s aged care, community support and disability sectors will likely to have their  pay increased by a substantial amount, following the much-anticipated settlement.

“There is no question that they deserve it – that’s another issue altogether – but how will the Government fund it?” said Care Association New Zealand’s Victoria Brown, in reaction to this morning’s announcement.

The settlement negotiated between the Government, unions and sector organisations came about as a result of the equal pay case originally brought by rest home caregiver Kristine Bartlett and the union against her employer. The case hinged on the argument that aged care workers like herself were paid less because “women’s work” was fundamentally under-valued and hence her wage level was in breach of the Equal Pay Act.

While the courts ruled in Bartlett’s favour, establishing a pay rate that was deemed fair has not been so straightforward – the tripartite out-of-court settlement negotiations have been running for two years.

But finally, just ahead of this year’s Budget, a decision has been reached.

It is understood that the deal will see some employees’ pay increase by $3 an hour and others by $7, depending on their role and experience. The Herald has reported that Bartlett’s pay will likely increase from around $16 an hour to around $23 an hour. Pay increases will not be back-dated, and are set to kick in at the beginning of July. Annual increases over five years will see pay rates soar to around $27 an hour for some employees.

The deal is estimated to cost the Government in excess of $500 million a year, once fully implemented.

However, the precedent set by this deal is likely to impact on other women-dominated sectors that have been lobbying for better pay.

Labour leader Andrew Little says the deal will be an “overdue spur for pay equity and for lifting low pay in many other areas”. The Green Party also described the announcement as “long overdue”.

The aged care, home support and disability sectors have long advocated for better funding from Government to allow them to pay their staff more.

Geneva Healthcare’s chief executive Josephine Wallis says the company is “extremely delighted” to learn of the planned pay increase, giving carers the “due recognition they so well deserve”.

Summerset’s chief executive Julian Cook said today’s news signals “a positive step forward in ensuring caregivers are recognised for the important work they do every day”.

However, some providers are sceptical that the corresponding funding increase from Government will not cover the increase to staff wages.

“I don’t know who is going to do the maths for this so that everyone is paid fairly and equitably,” said Victoria Brown.

She said providers are nervous about the knock-on effect of the increase. If aged care nurses are paid at around $28 an hour, then it is likely their pay rates would have to be increased as well, to keep in line with the rise in caregiver rates.

She thought it possible that providers would have to look at staffing levels and consider redundancies if they were unable to afford the increase in staff wages, in the absence of adequate Government funding.

INsite will report on reactions from employers and employees as more details emerge today.

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