Rest homes continue to see rises in staff costs four months after new wage rates were implemented under the care and support workers' pay equity deal. Photo: Lynn Grieveson

As the Government promises to address significant flaws in proposed legislation destined to replace the Equal Pay Act of 1972, problems with fast-tracked pay equity laws for care and support workers persist. Teuila Fuatai reports.

An ongoing lack of clarity around Government funding of rest home caregivers is continuing to cause significant uncertainty in the aged care sector.

Four months after new pay rates affecting about 55,000 care workers were implemented, staff costs at rest homes continue to climb thanks to the care and support worker pay equity deal – with no signs of further funding.

According to the New Zealand Aged Care Association, which represents most of the country’s 650 rest homes, the reclassification process of qualifications – addressed as part of the pay equity deal – has led to staff pay rates shifting every two to three weeks for many rest homes.

Simon Wallace, chief executive of the NZACA, said the first lot of major changes were announced on July 4, and reclassified carers with nursing qualifications from the Philippines, India, South Africa, Australia and the UK into the top two pay brackets for care workers. Overall, there are four pay brackets. Any qualification held by a care worker which is not recognised by the New Zealand Qualifications Authority must be assessed, and reclassified into an equivalent one so it matches one of the four pay brackets for care workers.  

“So far, at least 300 qualifications have been assessed for equivalency, out of a possible 1200,” Wallace said. Careerforce, the industry training organisation responsible for the process, has also said more than 5000 inquiries have been received regarding qualification reclassification, indicating it is far from complete.

For rest homes, the continually changing qualification lists have made it difficult to plan wage bills – the biggest expense for the majority of providers. Furthermore, it has created a problem under the pay equity deal – supported by both the former National Government and current Labour-led one – which was avoidable, Wallace said.  

“We asked both the Ministry of Health and Careerforce to be consulted on the reclassification process for qualifications, however this never happened.

“Now, every two or three weeks, Careerforce releases another qualification equivalency list, which reclassifies more carers with qualifications – many of which fail to directly relate to caregiving – into either the highest, or second highest pay brackets,” he said.

Some providers have had up to half of their carer staff reclassified into higher wage brackets. While this would not be an issue under a fully-funded system, the Ministry of Health funding does not cover increases in wages for staff who now earn more as a result of the qualification reclassification process – despite that change coming as a result of the pay equity deal.  

“While members believe in paying staff fairly, releasing qualification lists that change a provider’s wage bill once or twice a month – by amounts unfunded by the Government – makes it incredibly difficult from a business perspective,” Wallace said.

“The lack of consultation, rushed implementation, and subsequent mess we’re now in, is completely unnecessary.”

The NZACA also commissioned consultancy firm Grant Thornton to perform an analysis on the impact on rest homes of the pay equity deal.

It found wage costs had increased, on average, 10 percent as a result of the qualification reclassification process which took place after July 1.

Communications between the NZACA and the former Tertiary Education, Skills and Employment Minister Paul Goldsmith, as well as the former Health Minister Jonathan Coleman, also show the association pleaded with those at the top level to have its concerns raised at the planning table.

Despite the lack of consultation being acknowledged by Goldsmith in a letter to the NZACA, the reclassification process has continued unaffected.

“While full consultation is always preferable, in this case MOH [Ministry of Health] and Careerforce were working under tight timeframes driven by the enactment of the legislation, but I note and agree with your point about the importance of ensuring full consultation in any future recognition of qualification equivalents,” Goldsmith said in the letter, dated August 4.

After waiting more than a month for that “full consultation”, the NZACA then wrote to Coleman in mid-September seeking advice.

“We have taken this matter up directly with Careerforce but attempts to resolve this situation have been unsuccessful so far,” Wallace said in the letter dated September 14.

“Careerforce can give us no assurance as to when the equivalency process will end, placing continued uncertainty on our members.”

Contact with the Tertiary Education Commission, and NZQA – the Government agencies responsible for funding tertiary education organisations, and developing and maintaining New Zealand qualification standards – had so far failed to resolve the problem, Wallace said.

The gravity of the situation for rest homes – some of which had closed due to increased staff costs and a related shortfall in funding – also meant the NZACA was considering legal action to “challenge Careerforce’s unacceptable process and its unsustainable results for the sector”, he said

No reply from Coleman has been received.

When asked about the reclassification process, the Ministry of Health disputed that providers were not being funded for increased pay rates.

Grant Pollard, group manager service commissioning, said funding – allocated on a per-bed basis –  had been based “on a number of assumptions”, including one that took into account the spread of workers across the four pay brackets

“This assumption is within three percent of the actual percentage of workers on the top two steps of the pay scale based on information from … providers in late August,” Pollard said in his written reply.

“DHBs are working to support providers where the impact of pay equity has had a negative impact while they adapt to the new environment.”

As the reclassification process is ongoing, there are still regular announcements regarding reclassified qualifications. Just this week, Careerforce updated its website with the latest round of reclassified qualifications for care workers. Of the four announced, three were classified as equivalent to a qualification in the top pay bracket, while one was deemed to be equivalent to a qualification in the second pay bracket. 

Pollard also said the Ministry had “commenced discussions” with Careerforce in mid-April regarding the qualification reclassification process. The pay equity deal was announced on April 18.

While Careerforce did not respond to requests for comment yesterday, the organisation has previously said it had not been approached by the Ministry until May 19.

“I remember thinking at the time we’ve got about three days of doing this work,” Careerforce chief executive Ray Lind told Newsroom in August.

Lind had also been unaware of why Careerforce had not been called in before May 19 – particularly because providers had been asked at the time to have all staff data submitted to the Ministry by June 2. 

“Part of the reason [could be] that … nobody at the Ministry anticipated how potentially complicated it could be, and we weren’t party to the negotiations … to say ‘hold the bus’. This is more complicated than it seems,” he said.

Meanwhile, Wallace has said that the NZACA was hopeful for an improvement under the new Government. The reclassification of overseas qualifications needed to be halted immediately, and a review of funding for the pay equity should take place, he said. Legal action is still being considered.

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