New Zealand government offers $2bn pay settlement to 55,000 care staff

The New Zealand government has offered to increase pay for 55,000 employees in the care and support sector as part of a $2 billion (£1.1 billion) five-year pay equity settlement.

The pay increases, which would come into effect from 1 July 2017, would see affected care staff awarded a pay increase according to their qualifications or experience, with the majority of impacted employees expected to receive a pay rise of between 15% and 50%.

The wage increases would see pay rise to between $19 (£10.60) and $27 (£15.07) an hour over a five-year period.

From July 2017, staff on the minimum wage would see their pay rise to at least $19 an hour. Currently, approximately 20,000 care sector employees are on the minimum wage of $15.75 (£8.79) an hour.

Existing employees would be transitioned on to the new pay scale, with pay dependent on skills and experience. New staff employed after 1 July 2017 would be placed on the pay scale according to their level of qualifications.

The funding for the pay rises would be achieved using an increase of $1,856 billion through the government’s Vote Health allocation and $192 million to the Accident Compensation Corporation (ACC). Vote Health is the primary source of funding for the health and disability system in New Zealand.

Jonathan Coleman, health minister, is to introduce legislation to parliament to ensure the pay rises occur in the agreed manner. The unions will put the offer to employees in the sector, who will vote on whether to accept it over the next few weeks.

The pay settlement offer follows a pay equity claim brought forward by E tu, previously the Service and Food Workers Union, on behalf of care employee Kristine Bartlett against residential care home TerraNova in 2012. The claim stated that TerraNova was in breach of the Equal Pay Act 1972, with gender bias stated as the reason for low pay.

The case was brought before the Employment Court, the Court of Appeal and the Supreme Court, with judgements supporting Bartlett’s argument. In October 2015, the government announced it would enter into negotiations with providers and unions to discuss pay rates for care and support staff. A joint working group that focuses on providing principles for practical guidance around implementing pay equity was also proposed. The group issued its first recommendations in June 2016.

Coleman said: “This settlement recognises the work carried out by the 55,000 [employees] in our aged and disability residential care, and home and community support services across the country.

“Home and community support, disability and aged residential care [employees] are widely seen as amongst the most deserving of recognition as a pay equity case. It is an historic moment for the government to address this undervaluing with Ms Bartlett and the unions.”

Cee Payne, industrial services manager at the New Zealand Nurses Organisation, added: “This equal settlement delivers pay rates that truly reflect the skills and importance of the work that care and support [employees] undertake every day.

“Decent pay rates and the right to achieve qualifications will grow and retain skilled [employees] to care for our elderly. This will build public confidence that high quality care will be delivered to our families’ loved ones in our rest homes and hospitals.”

Simon Wallace, chief executive at the New Zealand Aged Care Association (NZACA), said: “We have campaigned for many years on behalf of our caregivers for appropriate funding to pay them for the wonderful job they do looking after New Zealand’s elderly population.

“We must acknowledge Kristine Bartlett for her action in championing the case for caregivers over the past five years. At the same time, we acknowledge NZACA member TerraNova Homes and Care, the rest home that was the subject of the union action. This has been a heavy load for them to carry on the industry’s behalf.


“Today’s settlement creates the right pay and conditions for caregivers and is a game changer in a sector that has traditionally struggled to attract New Zealanders into these roles.”