Limit on childcare fee increases as Labor agrees to fund 15 per cent pay rise for workers

Childcare workers will earn more than $100 extra a week from the end of the year after the federal government agreed to fund a 15 per cent pay rise where centres guaranteed to limit fee hikes for families.

Childcare workers will earn more than $100 extra a week from the end of the year after the federal government agreed to fund a 15 per cent pay rise where centres guaranteed to limit fee hikes for families.

The total pay rise will be funded over two years, starting with a 10 per cent increase in December followed by a further five per cent bump at the end of next year under the deal struck between the government, unions and childcare providers.

As a result a typical early childhood educator paid the current award rate would get a rise of at least $103 per week this year, increasing to at least $155 a week from December 2025.

The wage increase, which will cost an estimated $3.6 billion over two years, applies to about 216,000 workers, including those in outside school hours care services.

To be eligible to receive funding for the wage increase, early childhood education services will not be able to increase their fees by more than 4.4 per cent over the next 12 months starting from now.

Prime Minister Anthony Albanese will announce the childcare worker pay rise in Sydney.

An early educator on the current award rate earns about $53,664 a year, which will increase to $61,724 over the next two years as the new pay rise comes into effect.

Anthony Albanese, who will announce the deal in Sydney on Thursday, said Labor was delivering “fair pay” for the workers who ensure Australia’s children are “safe, happy and learning alongside their friends”.

“Early educators shape lives and change lives,” he said.

“We can never thank them enough for what they do – but we can make sure they are properly valued and fairly paid.”

The Prime Minister said the agreement would also keep fees down for families.

“This will provide even more cost of living relief,” he said.

Education Minister Jason Clare says the deal will help Australians struggling with cost of living pressures.

Education Minister Jason Clare said the child care debate was “over”.

“It’s not babysitting,” he said.

“It’s early education and it’s critical to preparing children for school.

“They lift our kids up and now we are lifting their pay.”

Mr Clare said the agreement was giving families a cost of living “double whammy” by lifting wages and keeping prices down.

“A pay rise for every early childhood educator is good for our workforce, good for families and good our economy,” he said.

Minimum wages for childcare staff have been driving workers out of the industry, which has a workforce shortage of about 17,000 people.

The childcare wage increase will cost the federal government about $3.6 billion over two years. Picture: NewsWire

Early Childhood Education Minister Dr Anne Aly said the highly feminised workforce had been neglected and taken for granted “for far too long”.

“Properly valuing the early childhood education and care workforce is crucial to attracting and retaining workers and vital to achieving the quality universal early learning sector Australian families deserve,” she said.

The wage negotiations were the first major test of the Albanese Government’s controversial multi-employer bargaining laws, though talks benefited from all parties already broadly agreeing about the need for a pay increase.

The sector wanted the government to fund it, while Labor sought assurance any fee increases would be limited.

The United Workers Union had sought a 25 per cent pay rise through the Fair Work Commission, which would have been in line with an increase previously awarded to aged care workers.