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Thursday, 9 December 2010

UWA Business School
With the worst of the financial crisis over, Western Australia's economy is starting to return to its previous high levels of growth. In the mining and resources sector alone, Premier Colin Barnett has estimated that $170 billion worth of projects will come into existence over the next five to seven years.

Yet despite this economic growth, The University of Western Australia Business School Professor Trish Todd says that many employees still face significant equity issues in the workplace. ‘While workers in the oil and gas industry have won a 30% pay increase through the hard bargaining of their union, low paid workers in the Social and Community Services (SACS) sector, whose employers are struggling to even meet the costs of the modern award wage levels, have been left well behind,' she said.

‘The market forces only work for some employees and some sectors. We can see it working for employees in the mining and resources sector and for managerial and professional employees in general - as the labour market tightens they can demand higher wages and salaries. However, when we look at the care sector, in most instances low paid care workers can't demand much more as their employers simply don't have the money to pay them. There is a serious question about the sustainability of a quality care sector in Australia.'

The provision of quality community services, aged care and childcare is one of the major challenges facing Australian society as demand for services increases. Paradoxically, says Professor Todd, the viability of the SACS sector is becoming more and more questionable due to insufficient funding and complicated funding models. ‘The lack of adequate community services impacts on those in need of such care, as well as the women who take on the role of primary carers, and will work against the drive to increase participation in Australia's workforce,' she argued.

‘Employees are finding it more and more difficult to work in these sectors because they're low paid. Employers want to be able to pay higher wages but they don't have the revenue to pay them. People in this area are working very hard but they're paying the price for a poorly funded sector.'

One of the main factors contributing to the low wages in these sectors is the structure of government funding. The 2010 Productivity Commission report into the not-for-profit sector found that the true costs of service delivery are not recognised or met in most community services funding contracts. The Commission concluded that the failure of respective governments to provide adequate funding not only reduces the capacity of agencies to recruit and retain staff, but inappropriately transfers risk from government to agency to frontline care workers.

It was a theme taken up earlier this year by WA Health Minister Kim Hames. ‘We are 2,500 aged care beds less than what we should have per population and the reality is that the Commonwealth funding for aged care beds is inadequate,' he argued.

Both the workers and many of the employers in the community services sector have been looking to the federal government for leadership on the issue. The inclusion in the Fair Work Act of provisions for the low paid bargaining stream and equal remuneration orders created some optimism that there was now the potential for these groups of workers to seek a pay rise. Earlier this year, the Australian Services Union (ASU) launched a case seeking an equal remuneration order for SACS workers, and the federal government's initial support for it was widely welcomed.

‘The federal government was going to act where others hadn't,' says Professor Todd. ‘Adding to the optimism, many employers in the sector supported the union's case, arguing that increased pay rates were essential to ensure a stable labour supply to sustain the sector and would be worth any anxiety about the funding of such increases.

‘Unfortunately the federal government has now undermined its own professed support for the case. Instead of committing to the funding of its share of any pay increase deemed to be a fair wage by Fair Work Australia, the government warned that any additional government funding is likely to be at the expense of other government funded services and encouraged FWA "to find the right balance between equal remuneration for SACS employees and the broader implications of any wage increase". By any measure the claim before Fair Work Australia is a modest one. It is not a claim for compensation and back pay for years of underpayment of workers in the sector; rather, it is looking to fairer pay in the future. The Heads of Agreement signed by the ASU and the federal government provides for an extensive phase-in period for any wage increases that flow from a FWA decision. There is a minimum of a six-month delay after the decision, to be followed by a phase-in of any wages increases over a further 4½ years. The agreement of the ASU to this five-year phase-in is very generous and amply recognises the need for fiscal restraint.'

Meanwhile, the Liquor, Hospitality and Miscellaneous Union has lodged a case on behalf of aged care workers under the low paid bargaining stream of the Fair Work Act; this stream presumes that enterprise bargaining will result in better wages and conditions outcomes and aims to assist low paid workers who have not previously been covered by an agreement. National employer bodies - the AiG and ACCI - have expressed concern about the outcomes of this case and the equal remuneration application. They have argued that the possible flow-on claims and the potential disturbance to existing wage relativities, should either or both cases be successful, could place undue pressure on employers, and could also affect the sustainability of the community and aged care sectors.

‘There is no doubt that substantial wage increases for community and aged care workers would amount to substantial increases in the cost of the provision of care in Australia,' agrees Professor Todd, ‘but unless we increase the funding we are going to face a huge social problem. How will we care for the most vulnerable in our society? We know that demand for care places is only going to increase; we know that the sector is currently underfunded, and we want top quality care services for our family members who are unable to care for themselves. So how are we going to respond to this problem? Has Australian society decided that we can only have a community care sector if the employees in it are underpaid relative to the work they do?

‘If we want a sustainable quality care sector then we need to send a clear message to the federal government that this is a priority that they cannot shirk. WA is leading the way economically with the resources sector; can it lead the way in addressing this problem which underpins the future of our society? Is there a link between the increasing income flowing to federal and state government coffers from the mining and resources sector and the unmet needs of our care sector? Yes, everyone is putting their hand up for a share of the income from the resources sector, but where do the care sector and the people who work in it rank in our priorities?'

Media references

Heather Merritt
Director, External Relations
UWA Business School
T: +618 6488 8171
E: [email protected]

Verity Chia
Communications Officer
UWA Business School
E: [email protected]

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