Rest homes weigh-up pay equity settlement impact

Small rest homes, particularly in rural areas, are still coming to terms with the realities of the Government’s pay equity settlement.

A number of rest homes in Rodney are adopting a ‘wait and see’ approach to the pay equity settlement, which was announced in May and came into effect on July 1.

The settlement covers 55,000 workers in aged and disability residential care and home and community support services in New Zealand. It prescribes pay increases from around $15.75 an hour to between $19 and $23.50.

Although providers will receive additional funding towards offsetting the additional costs imposed by the legislation, NZ Aged Care Association chief executive Simon Wallace says the reality of the funding mechanism and its urgent implementation is leaving many members in jeopardy because they have had little time to adjust their business models.

He says the actual funding will fall short of the Government’s long-stated intention to ‘fully fund’ the settlement.

“Residents and their families who pay privately for care face an increase in their annual fees to the tune of up to $4500 – an outcome we pointed out earlier to Government, but regret that it has remained unfunded,” Mr Wallace says.

“The Government chose not to fund these 25 per cent or so of residents who are ‘private payers’ because they do not meet the Government’s asset and income criteria for fully subsided ‘rest home’ level care.”

Waiwera’s Pinehaven Cottage part-owner Lorraine Mann says is there is still a lot of uncertainty around the change.

“There’s going to be a big wash-up in September when the Ministry of Health will have a better idea of the impact,” she says. “We’re anticipating that it is going to be hard for small rest homes."
Pinehaven caters for 34 residents, and includes a dementia unit. It has 35 staff, most of whom are part-timers.

Lorraine says the pay rise only applies to caregivers and activity providers with other staff, such as cleaners and cooks, missing out.

“Some people are feeling like they're being left behind and I think we will see other unions bringing forward their pay cases soon.”

Lorraine says staffing levels, service levels and charges are all governed by the Ministry.

“There’s very little room for us to move and that’s why the heaviest burden will fall on those who pay for care privately. Reducing services is not an option, even if we wanted to, which we don’t. We’re there to care for our residents.

“I’m not saying the pay rise wasn’t justified, but it was a big hike so we will have to wait and see what the reality looks like.

“The huge profits you see posted for retirement villages do not reflect what’s going on at the small to medium rest homes. We work under a completely different business model.”
The owner of Milton Court in Orewa and Leigh Road Cottage in Whangateau, Dennie Chiew, estimates that the difference between what the Ministry is covering and the actual wage cost per week is about $5000.

“Plus, the cost of annual leave and lieu days haven’t been taken into account,” Dennie says. “Rest homes aren’t a business where you produce a lot of profit. It is getting harder and harder to operate sustainably and provide the best level of care possible.”

Some rest home owners are also concerned that the new pay structure could inadvertently penalise experienced caregivers. If they leave a job and join another organisation, they could find themselves on Level One, the lowest pay rate, with no recognition of their prior experience. Whereas someone who has qualifications but no practical experience has to be paid at the higher rates of Level Three or Four.

Simon Wallace says smaller rest homes are most affected by the settlement, often in rural areas, as well as those run by welfare, trusts or religious-based organisations.


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