$2b pay equity deal boosts caregivers' incomes

18 April 2017

The long-awaited pay equity settlement for health workers will see the caregiver hourly pay within five years match the current pay rate for new graduate nurses.

Health Minister Jonathan Coleman announced today that the $2 billion pay settlement over five years will start to kick in from July 1 following the successful Kristine Bartlett vs TerraNova case brought by E tū (previously the Service and Food Workers Union) under the Equal Pay Act.

After nearly two years of out-of-court negotiations, the historic settlement will mean that some workers on the lowest wage will receive a 19 per cent pay increase on 1 July – an extra $100 a week for full-time workers.

Simon Wallace, Chief Executive of the New Zealand Aged Care Association, said the settlement brought caregivers "at least up to parity" with their health care assistant (HCA) counterparts in public hospitals.

Coleman said the settlement recognised the work carried out by the 55,000 workers in the aged and disability residential care and in home and community support services across the country.

He said from 1 July the predominantly female workforce – mostly on or around the minimum wage – would receive a pay rise around 15-50 per cent depending on their qualifications.

“For the 20,000 workers currently on the minimum wage of $15.75 per hour, it means on 1 July they will move to at least $19 per hour, a 21 per cent pay rise. For a full-time worker, this means they will be taking home around an extra $100 a week, which is over $5,000 a year.”

Overall wages will increase to between $19 to $27 per hour over five years, with existing workers transitioned to positions on the new pay scale based on their skills, and experience. For new workers employed after 1 July wages will be based on an individual’s level of qualifications.

A care and support worker on the minimum wage with three years’ experience and no qualifications will receive a 27 per cent increase in their hourly wage rate, moving from $15.75 to $20 per hour from 1 July. That rate would progressively increase to $23 by July 2021 and would rise further if they attain a higher qualification.

Under the current New Zealand Nurses Organisation/District Health Board MECA (multi-employer collective agreement) the base pay rates for public hospital health care assistants (HCA) range from $17.76 an hour to $20 an hour ($36,955 to $42,650 a year). The enrolled nurse base pay rates range between $21.40 to $24.36 an hour ($44,505 to $50,687 a year) and a new graduate registered nurse starts out on $23.77 an hour ($49,449 a year).

The NZNO/DHB MECA is due to expire on 31 August with negotiations likely to begin for a new agreement in June. NZNO industrial advisor Lesley Harry is already on record saying NZNO would be looking "very, very carefully" at the details of the pay equity settlement and its impact not only on its HCA members but also on its enrolled and registered nurse pay.

Coleman said the $2.048 billion settlement over five years would be funded through an increase to Vote Health and a $192 million increase to ACC. While ACC levies are currently set for the immediate upcoming years, Coleman said they "may possibly" increase over the next decade to support the pay settlement. 

"There may also be an increase in costs for people in aged residential care facilities, whose assets keep them above the subsidy threshold. This will be determined through the annual Aged Residential Care contract negotiations," said Coleman in a statement announcing the settlement.

Coleman thanked E tū, the PSA and NZNO for their "constructive and positive approach" throughout the tripartite negotiations, which have taken nearly two years. He also thanked the New Zealand Aged Care Association, Home and Community Health Association,and the New Zealand Disability Support Network for their "vital role".


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