Aged care workers should wait until January 2026 for the full 23% pay rise ordered by the Fair Work Commission, according to the Albanese government.
The commonwealth has requested that the commission phase in the increase over two years, from January 2025 and 2026, to prevent “large one-off wage increases” that would add to workforce shortages elsewhere in the economy.
In a submission released on Friday the government said this was “fair and reasonable” for workers involved in direct care, given its fiscal strategy and that aged care workers received a 15% interim pay increase ordered in November 2022.
However, indirect workers – such as administrative workers, cleaners and those providing food services – could expect their smaller pay rises sooner, as the government accepted a January 2025 start date for these workers.
In March the commission adopted a new benchmark pay rate of $1,223.90 a week – or $63,642.80 a year – for certificate III qualified employees in aged care.
“The total wage increase which will be produced by the adoption of this benchmark rate, inclusive of the interim increase, will be 23%,” the commission said.
The decision will trigger billions of dollars of investment in aged care, on top of the $11.3bn allocated over four years in the 2023 budget for the interim increase.
On Friday the government submitted that it would commit to fund 50% of the remaining pay increase for direct care workers in January 2025, and the remaining 50% in January 2026.
However, the commission could order the full pay rise sooner.
The January 2025 start date would be appropriate to ensure the wage increases are “correctly calculated” and regulations were in place, the government submitted.
With respect to the 12-month delay for the rest of the rise, the government submitted that “employment shortages are prevalent across the economy, including in sectors such as hospital nurses, disability carers and childcare workers who have substitutable skills with aged care workers”.
It cited statistics showing job vacancies in the healthcare and social assistance industry as at February 2024 were about 118% higher than February 2020 levels.
“The commonwealth considers it prudent to adopt a phased approach to the funding of large one-off wage increases, particularly where large wage increases may draw workers from other sectors of the economy that also face employment shortages,” it submitted.
The government also noted 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”.
Aged care workers and their unions launched the work value case in November 2020, seeking a 25% pay rise on the basis pay in sector was not an adequate “safety net” and that care work had been historically undervalued for gender-based reasons.
In March the Health Services Union secretary, Gerard Hayes, said the pay decision was “one of the best outcomes this union has ever achieved”.
Hayes said the pay rise would make “aged care competitive with the public health system”.
“Dignity matters when it comes to aged care. Older people will not be treated as commodities. They will be cared for in their older years.”
