Aged care workforce wage pressures

Budget Review 2013–14 Index

Peter Yeend


The Government announced in the 2013–14 Budget a further measure to address the pressures facing the aged care workforce.[1] The initiative proposes to change eligibility for the Workforce Supplement to preclude aged care providers whose workers are paid under state or territory awards or agreements and to extend access to the Supplement to providers of Veterans’ Home Care and Community Nursing programs.

This initiative follows a 2012–13 Budget initiative aimed at addressing aged care workforce issues along with the Living Longer Living Better (LLLB) aged care reforms the Government presented in that Budget.[2] The 2012–13 Budget initiative provided $1.2 billion payable over five years to address long-standing workforce pressures in aged care. It was to be delivered through a Workforce Compact developed by an independently chaired Strategic Workforce Advisory Group, in consultation with the sector.[3] The Workforce Compact is to start in July 2013.[4]

The Workforce Compact

The Workforce Compact is an attempt to improve wage rates for aged care workers in order to retain workers and also to encourage more workers into the industry. Under the Compact, if an employer agrees to establish the wage rates and conditions set out in the Compact, they are given access to government provided Workforce Supplement payments, which they are required to pass on to their qualifying employees. The Compact requires employers to engage their employees under enterprise agreements providing minimum wage levels. In order to qualify for the Workforce Supplement, employers need to provide:

  • minimum annual wage increases for all aged care employees of 2.75%, or the Fair Work Australia minimum increase, whichever is the greater and
  • phased wage increases over and above the relevant award rates totalling 3% for personal care workers, 8.5% for enrolled nurses and 12.6% for registered nurses.

Eligible aged care provider employers that meet the terms and conditions of the Compact will receive an extra:

  • 1.0% of the amount of the basic subsidy/funding agreement in 2013–14
  • 2.0% of the amount of the basic subsidy/funding agreement in 2014–15
  • 3.0% of the amount of the basic subsidy/funding agreement in 2015–16 and
  • 3.5% of the amount of the basic subsidy/funding agreement in 2016–17.

All Workforce Supplement funding is to go to wages and is required to be delivered as an additional one per cent wage increase for all employees each year in 2013–14 to 2015–16, and an additional 0.5 per cent increase in 2016-17.[5] Aged care providers are expected to contribute to the implementation of the Workforce Compact, that is, help make up for the proposed higher wage rates.

Dissent over the Workforce Compact

Generally, the issue aged care providers have with the proposed Workforce Compact is that they do not think the Workforce Supplement funding is sufficiently attractive for them to make the wages up to the required minimum to obtain the Supplement. Catholic Health Australia (CHA) claims one in five of their providers surveyed said they would not sign the Compact. CHA said all CHA providers surveyed pay above award wages and they have consistently argued pay rises should be fully funded by Government and Government contracts should not stipulate industrial outcomes.[6] Aged and Community Services Australia (ACSA) also has reservations regarding the Workforce Compact and said while the Government is providing some funds to pay for the wage increases, it will be required of the providers to find the additional funds. The capacity of small, independent, regional and rural providers to implement the requirements and cope with the administrative burden is also a concern.[7]

[1].       Australian Government, ‘Part 2: Expense measures’, Budget measures: budget paper no. 2: 2013–14, p. 174, accessed 16 May 2013.

[2].       Australian Government, ‘Part 2: Expense measures’, Budget measures: budget paper no. 2: 2012–13, p. 180, accessed 16 May 2013.

[3].       Department of Health and Ageing (DoHA), Strategic Workforce Advisory Group, accessed 16 May 2013.

[4].       DoHA, Living longer living better: workforce, Canberra, 2013, accessed 16 May 2013. The Workforce Compact is to begin in July 2013 and is aimed at improving the capacity of the aged care sector to attract and retain staff through higher wages, improved career structures, enhanced training and education opportunities, improved career development and workforce planning and better work practices.

[5].       DoHA, ‘Frequently asked questions’, Living Longer Living Better website, accessed 16 May 2013.

[6].       Catholic Health Australia, Aged care legislation must pass, but success of Compact in doubt, media release, 24 April 2013, accessed 16 May 2013.

[7].       Aged Care Services Australia, Government workforce support announcement, media release, Canberra, 5 March 2013, accessed 16 May 2013.

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