Aged-care wage rises to buffet budget

With the federal budget now just a month away the government is sharpening its pencil as it looks to defer pay rises awarded to hundreds of thousands of aged care workers.

The Albanese government is looking to delay wage rises awarded to hundreds of thousands of aged care workers.

The Albanese government has overtly flagged budgetary pressure for proposing a delay to aged-care worker pay rises awarded by the Fair Work ­Commission.

Another reason it cited for holding back some wage hikes until 2026, that higher pay would divert workers from other sectors such as disability and childcare into aged care, was criticised by aged-care providers and ­unions, who warned of a “workforce crisis” and said the full pay rise awarded would merely bring aged-care pay into line with other care jobs.

In the wake of the FWC’s award in March of further aged-care pay increases of up to 13.5 per cent for some of the sector’s 350,000 workers on top of a 15 per cent interim hike last year, the government on Friday committed to fully funding the increase but called for its phasing in over two years.

Under a submission lodged with the FWC on Friday, some 250,000 direct care workers providing personal care to older Australians would receive half their wage increase, ranging between 3 per cent and 13.5 per cent depending on the role, in 2025 and the balance in 2026.

Another 100,000 indirect worker, including cleaners, laundry workers and gardeners, would see a wage rise of between 3 per cent and 7 per cent implemented in full from January.

The federal budget is just a month away, and with the FWC’s March award set to cost about $3.3bn over four years on top of the $11.3bn committed in the 2023 budget to cover the 15 per cent interim ruling, the government’s submission makes clear that balancing the budget is a primary consideration.

“The commonwealth funding commitment has been made in the context of its fiscal strategy, which is focused on improving the budget position in a measured way, consistent with the overarching goal of reducing gross debt as a share of the economy over time, while seeking to deliver relief from cost-of-living pressures without adding to inflation,” the submission said.

It noted other parts of the care economy, such as health, disability and childcare also had significant worker shortages. “In this context, the commonwealth considers it prudent to adopt a phased approach to funding large one-off wage increases, particularly where large wage increases may draw workers from other sectors … that also face employment shortages.”

Tom Symondson, chief executive of peak aged-care provider advocacy group Aged and Community Care Providers Association, said the increased wages “will be invaluable for attracting much-needed workers into aged care (and) any delays will only add to the workforce crisis in the sector”.

Aged and Community Care Providers Association chief executive officer Tom Symondson.

“Our sector can only afford such increases for our valued workers with matching government funding. We see it as absolutely critical that government funding commence from the operative date for these increases in wages,” he said.

Health Services Union secretary Gerard Hayes said aged-care workers were “hanging on by the skin of their teeth to stay on in the industry” as they waited for their pay rise.

“This delay will create more problems in retaining or attracting workers. This pay rise … was a catch up, and the delay will keep them behind,” Mr Hayes said.

“I fear this will encourage the continued flight from the sector.”