Industrial Relations

28 February 2020

Wages: Australia’s industrial relations system
fails aged care workers

In Adelaide on 21 February 2020, Counsel Assisting made a 160 page submission to the Aged Care Royal Commission on workforce issues. The submissions can be seen as a de facto preview of recommendations the Commissioners are likely to make. On the issue of low wages, the preliminary conclusion is that government intervention and support is the critical precondition for correcting this anomaly. This is because collective bargaining at enterprise level has not worked. Similarly, Australia’s historical staple, compulsory arbitration, has not worked, at least not without federal government intervention.

Woeful wages
Personal carers are paid between $21 and $25 per hour, occasionally a few dollars more. The low carer wages are said to be a product of the ‘gendered nature of the work’ and an industrially passive workforce.

“.. it is assumed to be the work that women are born to do naturally and, as such, with paid care work being seen as equivalent to unpaid care work it’s therefore viewed as something that a lot of women are capable of doing, and so that it’s not particularly skilled work”.
S. Charlesworth, Transcript:6085, 16 October 2019
See also para. 559 of P.Rozen QC submission, 21 February 2020, for evidence of need for highly developed communication skills.

Registered nurses in the aged care private sector are paid less than their counterparts in the acute sector, for example less than an RN in a medical ward of a public or private hospital. This was not always the case. Until the early 1990s they were paid the same. Then nurses moved from State awards to a federal award and around the same time Australia moved to a new system of determining wages and conditions at the federal level. It is known as enterprise bargaining.

Collective bargaining does not work
Collective bargaining at enterprise level became formalised and dominant in Australia in the early 1990s, introduced by a Labor government with bipartisan support. For it to work requires reasonably even power between the principal parties. Nurses and other health care employees in the public sector are a reasonable match for the power of their employer, the government. Their unions are stronger there. Also, the private acute sector tends to adopt wages achieved in the public acute sector.

The picture is very different in the aged care private sector however. Unionisation is low and employers, the providers, are far more powerful than the employees. Wage rates in aged care have fallen behind because the increases obtained through bargaining have been less. Despite this, aged care ministers in Liberal-National governments have consistently responded to the aged care low wages problem by endorsing collective bargaining at enterprise level.

On balance, compulsory arbitration has not worked
Compulsory arbitration, a process where in theory power is irrelevant, is still available in limited circumstances. Counsel Assisting notes a successful arbitration in 2010. Five unions made a successful application for substantial wage increases, implemented over 8 years, for home care and disability workers (ASU v Australian Business Industrial (Re Equal Remuneration Case) (2012) 207 IR 446). The factor critical to success is held to be federal government intervention. The then Labor government supported the union claim before the tribunal and committed funds to cover the increases (P. Rozen QC, submission 21 February 2020, paras. 568-579).

The detailed laws around the compulsory arbitration option can prove to be a barrier however. A union attempt in 2011 to access the special provisions for industry-wide bargaining (Fair Work Act, Part 2-4, Division 9) for low-paid workers failed. The now Fair Work Commission found that aged care workers met the test of ‘low-paid workers’ but arbitrated to exclude many employers from the obligation of industry-wide bargaining because they were already covered by enterprise agreements (P. Rozen QC, submission, 21 February 2020, para. 590).

Employer capacity to pay more?….. apparently not
Providers have claimed before the Royal Commission that they cannot afford wage increases without further government funding and this seems to have been accepted without question.

The distribution between wages and profits
Yet providers have not been asked about the distribution between wages and profits. The nurses’ union claim that the percentage of provider expenditure allocated to wages for direct care has declined since the introduction of the Aged Care Act 1997 has not been explored (Witness statement, P. Gilbert, 26 September 2019, paras. 128-133 and 142). Also, a senior Health Department witness has conceded that the Department lacks a complete picture of wages and conditions actually operating in aged care (Submission, para. 551). Thus, the possibility that over award/ above agreement rates are being paid by some providers who are still managing to conduct a successful business cannot be excluded.

Further, providers have not been asked what happened to any funds they received when governments quarantined money for residential care wages in 2002/3 and 2012/3 but which resulted in no wage increases (P. Rozen QC, Submission, 21 February 2020, paras. 545-9 and 575).

Financial transparency overdue
Notably, the Morrison government has opposed recent minor party attempts to legislate for financial disclosure by providers of the way they spend the public funds they receive (Senate, Hansard, 5 December 2019).

The preliminary conclusion by Counsel Assisting that the sole answer to low wages is increased government funding, absent any requirements re financial transparency, appears very gentle on providers. A little more light on provider expenditure patterns seems a reasonable ask by taxpayers.