On 18 April 2017, the Government announced a $2 billion pay equity settlement for 55,000 care and support workers.
The settlement recognises the work carried out by the predominantly female workforce in New Zealand’s aged and disability residential care and home and community support services.
The settlement originates from the TerraNova pay equity claim brought by E tū (previously the Service and Food Workers Union) on behalf of care worker Kristine Bartlett. The case successfully argued that a caregiver’s pay is less than would be paid to a male with the same skill set in a different occupation due to the fact caregivers are predominantly female.
From July 1 the workforce, who are mostly on or around minimum wage, will receive a pay rise between 15 and 50 per cent depending on their qualifications and or experience.
The settlement means over the next five years, the workforce will see their wages increase on a range between $19 to $27 per hour. On July 1, the 20,000 workers currently on the minimum wage of $15.75 per hour will move to at least $19 per hour – a 21 per cent pay rise. This will result in increases to their take home pay of at least $100 a week, or more than $5,000 a year.
The $2.048 billion settlement over five years will be funded through an increase of $1.856 billion to Vote Health and $192 million to ACC. ACC levies are set for the coming years, but may possibly increase over the next decade to support this. However, that is not definite. 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.
Legislation will be introduced to Parliament shortly to implement the settlement agreement.
This settlement addresses a historic undervaluing of this workforce and will help to support increased qualifications and reduced turnover in the sector, which will result in better care for New Zealanders.