Aged care providers have “little or no wriggle room” to accommodate the increase in minimum wage.

Workplace Relations and Safety Minister Michael Woodhouse announced this week that the minimum wage will increase by 50 cents to $15.75 an hour on 1 April 2017. The starting-out and training hourly minimum wage rates will increase from $12.20 to $12.60 per hour, remaining at 80 per cent of the adult minimum wage.

“The Government is committed to striking the right balance between protecting our lowest paid workers and ensuring jobs are not lost,” said Woodhouse. “An increase to $15.75 will benefit approximately 119,500 workers and will increase wages throughout the economy by $65 million per year.

“At a time when annual inflation is 0.4 per cent, a 3.3 per cent increase to the minimum wage will give our lowest paid workers more money in their pockets, without hindering job growth or imposing undue pressure on businesses.

However, businesses within the aged care sector are likely to feel the strain of the minimum wage adjustment. Many aged care providers and home care providers will be forced to increase staff salaries by up to 3.3 per cent without a corresponding increase in government funding. Many aged care providers are already struggling to meet compliance costs in a capped funding environment; the increase in minimum wage will further exacerbate this situation.

New Zealand Aged Care Association chief executive Simon Wallace says aged care workers should be paid more for the valuable work they do. Indeed this has been the Association’s catchphrase during the ongoing Equal Pay negotiations involving caregivers.

“However, the reality is that increases in the minimum wage have far outstripped the increases our members receive each year via the ARRC agreement with DHBs.

“Our members operate year to year in a capped funding environment,” explains Wallace. “This gives members little or no wriggle room to account for the increase in the statutory minimum wage while still maintaining services provided to residents.”

New Zealand Taxpayers’ Union executive director Jordan Williams says the increase will also affect many workers.

“The Government knows very well that hiking the minimum wage faster than inflation means those most vulnerable are priced out of the job market. This is election year virtue signalling at its worst, with the cost landing on those already struggling to make ends meet,” says Williams.

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