Care Worker Salaries: Interesting Times Ahead
Guest post: Lyn, StrategicPay.
With the settlement in April 2017 for care workers, organisations in the not-for-profit sector directly affected will face some interesting challenges over the next 12 months and further into the future.
This settlement affects 55,000 employees spread across many organisations, but is concentrated in the Health Sector. The initial effects will be felt from 1 July 2017, however, we will not see the impact on pay practices until next year. Based on our current research and understanding of the settlement, we have identified implications across several areas. These include:
1. Pay compression
Given that the current pay rates for the supervisors of the care workers are little more than the care workers’ pay rates, one potential risk is that in some cases the pay difference between supervisors and staff will become virtually reversed.
This situation is not sustainable and is further complicated because the increased funding will not cover increases to the supervisors or managers of these staff members. In an industry which has already been operating on tight budgets for several years, organisations will be scratching their heads on how to overcome this issue.
Relativity with other groups
There are several groups that deem themselves to be similar, or have had actual linkages with the caregivers’ pay levels in the past. Despite the previous Prime Minister being clear that the context has changed and arguments based on these linkages around these for other groups will not be entertained, this will be difficult to sustain. Perhaps relativities will shift somewhat, but they are unlikely to change dramatically. This latter issue could become divisive as addressing it is both time consuming and expensive.
While a group of employees, long seen as deserving, getting what most see as a fair increase definitely creates a feel-good factor, there are other groups who view they are equally deserving.
Since the care employees are such a large group, the increases they will receive will be large, and as there has been widespread interest in their case, expectations will be raised across other occupations and industries. In an economy where pay increases have been low for the past five years, this could have a significant impact on wage movements across the board.
The higher pay rates will enable organisations to attract and retain quality staff. It will be interesting to see if not-for-profit organisations, not directly affected by the settlement, start to experience increased turnover or struggle to attract staff away from the higher paying care worker roles. We are already hearing of cases where this is happening on an individual basis, so would not be surprised to see become a much broader issue.
Although the settlement parameters were clearly outlined, the detail of how the settlement was reached, i.e. what comparators were used and what weight was given to what groups, has not been forthcoming. While legislation around the conduct of pay equity claims was being developed, and the previous government had a clear idea of how it wanted future cases conducted, the new government has indicated a desire to take a different approach, so the impact of the settlement is still an open question.
One thing is clear, however, this was indeed a ground-breaking settlement and the ripples will be felt across the economy, and undoubtedly the not-for-profit sector, for many years to come.