Workforce Compact announced

Details of the long-awaited and confidential Workforce Compact, worth $1.2 billion of federal government funding, was announced by Minister Butler at a press conference in south-west Sydney today.

By Yasmin Noone

Aged care workers on an enterprise bargaining agreement could see their wage sky rocket by up to 30 per cent over the next four years, following a federal government move to subsidise conditional pay increases by three and a half per cent, provided employers foot the rest of the bill.

The stalled Workforce Compact agreement between the government, trade unions and employers, which was due for public release well before the end of 2012, was finally announced by the Minister for Mental Health and Ageing, Mark Butler, at a press conference this morning.

Minister Butler detailed that the $1.2 billion of funding earmarked for the compact in Living Longer. Living Better (LLLB) package will start to flow from this July, in the form of a ‘Workforce Supplement’ that will go directly towards aged care worker pay rises.

The money will subsidise wage increases of three and a half per cent over the next four years. One per cent will be provided per year for the next three years before it is reduced to half a per cent in 2016.

“I think [the funding] will make a big difference to aged care workers,” Mr Butler told AAA. 

Minister Butler stressed the fact that the $1.2 billion is a “bridging supplement” which is not meant to solve all of the sector’s wages woes. But he said, and aged care trade unions agree, it is a start. Provider peak bodies and individual employers however are not convinced (more to come on AAA online).

AAA previously reported that, according to some industry figures, the Workforce Compact was ‘dead in the water’. This is still the view of our sources, as the compact announced today does not resemble the ideal outcome that all the parties intended to agree upon at the start of negotiations last year.

“…I’ve been frank today: this is not the end of the story as there is much to do in the future years around workforce issues and wages,” Minister Butler said.

“So I think this is an important start but there’s so much to do to ensure [the sector] is able to attract and keep a substantial number of new aged care workers in future years.”

“This is a really important milestone in the LLLB package. We heard a clear message from the community, providers and unions that we had to start to lift the wages of staff in the sector.

“We are very glad that we are able to make a start on that.”

At the moment, the award wage for a personal care worker – the lowest paid worker under the aged care banner- is around $18.20.

The fine print

To be eligible for the funding, providers must first adhere to the terms and conditions of the compact and negotiate enterprise agreements for workers.

The Workforce Supplement must be paid, in full, to workers as a wage increase. And, in addition to the government-subsidised wage increase (of 3.5 per cent over four years), employers must also foot an additional minimum pay increase.

The government press release does not detail all of the other compact conditions and, at the time of writing, there was no corresponding ‘Workforce Compact’ document (apart from the press release), available in the public domain which specified all of the compact’s requirements.

However, AAA understands that eligibility conditions will require an employer to phase in (over the four years) a three per cent wage increase above the award rate of pay for personal care workers; 8.5 per cent for enrolled nurses; and 12.6 per cent increases for registered nurse. Plus, participating employers will be  required to deliver all workers on enterprise bargaining agreements a minimum pay increase of 2.75 per cent per year over four years. The wage subsidy of 3.5 per cent from the government will be on top of the rates mentioned above.

“This means a personal care worker currently paid the award rate and who is employed by an aged care provider that meets the requirements would effectively see a pay rise of up to 18.7 per cent over four years,” Minister Butler said.

“Enrolled nurses would receive 25 per cent higher pay and registered nurses 29.9 per cent higher pay in the same situation.”

Minister Butler made the following statement about required Workforce Compact employer contributions to wage increases on ABC Radio today:

“Well, if their workers are still on the minimum award rate, which for a carer is about $18.50 an hour, then we’re also expecting them to lift that award rate by three per cent over a couple of years and to also make sure that there’s a minimum yearly increase in addition for the money that we’re paying,” he said.

“So this means that in the first couple of years a personal carer on a minimum award rate will be getting a yearly increase of about 5.25 per cent, which is a significant increase, to make sure they’re up to a rate which we think the market would reflect.”

Workforce sustainability

Mr Butler said the initiative was aimed at addressing workforce pressures with the aged care workforce needing to almost triple in size by 2050 to support Australia’s ageing population.

“A better paid, better skilled and better trained workforce will underpin a more responsive system that provides older Australians with quality care, when and where they need it.

“..We know that most Australians who pursue a career in aged care do it for much more than the financial reward, but pay rises of that level are a big incentive to work in this growing industry.”

The second part of the Addressing Workforce Pressures Initiative is the Aged Care Workforce Development Plan, which will begin in mid-2013.

An expert advisory group will be established to focus on better ways to support the aged care workforce.

This group will seek to ensure that – on top of wage increases – aged care workers get the other benefits, including improved career structures, better training and education and better work practices including lowering the high rate of workplace injuries in aged care.

Please note: The minister’s office called AAA on the morning of Wednesday 6 March, after this article was published on the afternoon of Tuesday 5 March, to explain how the government calculated the total wage increases. The above article was therefore ammended and updated on the morning of Wednesday 6 March with the new information available. AAA publishes this comment for transparency and accuracy.

Tags: anf, gillard, industrial-relations, living-longer-living-better, mark-butler, penshurst, subsidies, supplement, united, voice, wage, workforce, workforce-compact,

4 thoughts on “Workforce Compact announced

  1. Anyone feel an election in the air?? So the Government over four years will contribute 3.5% (average 0.875% per annum) and the service providers put up a further 2.75% per annum (three times the Government contribution plus funding all of the on-costs)on no assurance that subsidy rates will be sustained to pay for it…. Do I have that about right?

    The reduction in ACFI payments was to realign funding to the long-term average growth of a “real” ~2%. Let’s not forget that the 1% (read 0.875%) per annum under the compact is coming out of existing funding, so the net contribution of Government is, well, zero isn’t it? Minister Butler justifies this by saying that income to providers has outstripped wage rates and therefore providers are pocketing the difference. I’m certain that his advisors could explain the difference between labour and other costs, and the fact that Government backed charges such as energy and water have also risen dramatically. Perhaps someone also needs to advise him that EBITDA is a measure of cash flow, not profitability, and inherently ignores the major impacts of the aged care building boom we’ve seen over recent years – interest and depreciation.

    Aged care workers need to be paid a decent wage – there is nobody in the industry arguing against that. However to do so requires additional funds and if the government doesn’t want to (or indeed cannot) provide those funds then as the PC report stated the market needs to be opened up. This is yet another example of where the Minister in his infinite wisdom brings forward the economic pain for service providers, whilst deferring any gain on the manyana plan – after all he won’t have to deal with the fallout.

    Waging class warfare in Australia by painting the employer as the bandit and Government the saviour, when in fact the Government holds the whip hand, is deplorable but has become an expected part of Government policy.

    When all the who ha dies down and the spin doctors go onto their next assignment service providers will be left with the job of cleaning up the mess, trying to put reality into the false expectations of huge increases that have been promulgated by the Government.

    And as for resident benefit? It doesn’t take Einstein to work out that when you take a fixed or indeed reducing sum (funds available for hours) and divide it by a larger denominator (hourly rates) then the answer (hours available for care)reduces. It really isn’t rocket science.

  2. I cannot believe my ears. Is our Government attempting to blind us silly white mice by producing some shiny thing which is obviously full of spikes and paid for in actual fat from dwindling ACFI funding offered Residential Care Service Providers. PLEASE! Aged care workers dont have dementia or suffer gullability – give them REAL RESPECT through REAL WAGE INCREASES not screwed out of a dwindling ACFI income. No-one is going to accept this buy-a-vote attempt.

  3. Talk about revisionism! The comments above (and some below) indicate the misinformed and mischievous approach adopted by employer representatives throughout the Compact negotiations. I was involved so I have some claim to know.

    To Glen Bunny first. On a number of occasions the ANF urged employers to produce the figures predicting doom and gloom in respect to the ACFI reforms, including at NACA. None were forthcoming. Remember, that on annual COPO payments of usually 1.8 – 2.5% employers in most states have managed 3.25% – 4% annual increases in wages for the last decade. In any case the DOHA ACFI monitoring committee of which both LASA and ANF are members will be looking at what the real impact is. But back to the Workforce Compact.

    Professor John Kelly says “The difference is that at least 30 per cent of small-to-medium remote rural providers are not covered by an EBA, just a modern award.” I challenge John Kelly to find me more than a handful of RNs in a rural or remote location who are actually being paid the modern award rate.

    The figures on Enterprise Agreement coverage aren’t being admitted. In Victoria and NSW respectively 97% and 91% of all aged care facilities are completely covered by enterprise agreements. In other states the percentage is not so high, but the percentage of Australia’s 2700+ facilities and beds covered completely by enterprise agreements is just under 89%.

    Indeed, lost in all the commentary is that the Compact does not require an enterprise agreement for residential facilities of less than 50 beds where they don’t currently have an EA or in any home and community care service where they don’t currently have an EA. So, no small provider who doesn’t currently have an EA will be forced onto one.

    But the real question for John Kelly is how can an aged care facility in rural locations in NSW or Victoria afford to pay decent wages and conditions 10-30% above the relevant modern award, but not in other regional or rural locations in SA, Queensland or WA? After all, they receive the same Commonwealth funding through ACFI and CAP and the remote/rural facility in WA, Queensland or SA is just as likely to have alternate funding sources such as ILUs to supplement Commonwealth subsidies.

    The main problem here is South Australia where only one third of facilities/beds have agreements covering PCAs and support staff, compared to 98% EA coverage for nurses. The claim by SA providers is that the money being saved by these providers, by keeping wages at starvation levels for carers, is that the profit has been reinvested in better staffing levels and skill mix. That is a claim that would be humorous if it weren’t so blatantly wrong (one only has to look at the Bentley Reports and other industry surveys and talk to aged care workers in SA to expose this for the deception it is).

    All through this process the position of the providers has been at sixes and sevens (except for Martin Laverty who maintained a sustained objection to linking wage increases to enterprise agreements). Even then, there was substantial agreement between all parties at the end of the Compact negotiations.

    The only major divide at the very end of Compact negotiations was the issue of who paid the on-costs (so around 0.19% of the money). The employers had already offered a 2% margin above the modern award for PCAs and support staff – the end result was 3% – a difference of 19 cents an hour for the very few facilities not already paying above that margin.

    The employers had also offered during negotiations that employer funded wage increases would be 2.5% or FWA annual wage increases which ever was higher(the end decision by government was 2.75% or FWA whichever is higher). The employers and unions had already agreed to exempt small residential providers and all HACC employers except where they already had an agreement.

    Can you spot the difference? Wait, I’ll get my microscope out to see if I can find it! Perhaps these industry reps should be honest with their members about what they really agreed to in negotiations. Unless, of course, they sat there for three months, made offers and never actually intended to reach an agreement?

    And now we have former NSW Liberal Party State Director Martin Laverty complaining about it costing $38,000 to do an enterprise agreement for a provider workforce “exclusive of external legal and internal management” costs. I don’t think so Martin. The ANF can provide you with templates and advice that will cut the cost by 90%. It is not rocket science. There are 750 enterprise agreements out there already in aged care. Martin’s Catholic residential facilities are completely covered by enterprise agreements. Just pick the bits you want and away you go – for free.

    No, what the employer response is all about is playing politics, and given the federal election is coming up employers see the chance to overturn the whole Compact, and perhaps score a pre-selection along the way.

    The comments completely ignore the elephant in the room: the Productivity Commission recommendations and the desperate need to boost the low wages in the aged care sector to attract and recruit the workforce of the future and keep the wonderful people you take for granted now. The real issue is the need for “fair and competitive wages” called for by a NACA document submitted to Government, but which during Compact negotiations industry reps denied was officially endorsed by their organisations(“they were just individuals with no authority”).

    The best way to ensure that the Compact money actually gets into the pockets of workers is through an enterprise agreement, which they can personally enforce.

    Once again, providers have let themselves down, demonstrating that they cannot be trusted to operate professionally in the best interests of the industry. This is a major growth industry with cottage industry representation.

    Now, would you like me to really tell you what I think about the quality of employer representatives in aged care..?

  4. Have we become so cynical that we can’t accept that a government and a minister have genuinely listened to the aged care sector (unions and employers) and allocated funding directed towards the aged care workforce?

    I can’t believe the negativity, cynicism and downright nastiness which has arisen and been aired in the media in such a short time over funding which has been allocated to improve the low wages of aged care workers.

    For the record, the money was allocated in budget 2012/13, it was agreed to by key employers and employer associations and unions as part of a bigger aged care reform package.

    We didn’t get everything we wanted, but we got enough to make a difference to the lives of aged care workers. It’s time for employers to focus on what has been negotiated and get the money into the pockets of workers

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