Feature
A fair deal
by Gordon Campbell
How will the March 27 rise in the minimum wage affect workers and employers?
Employers who run residential health-care facilities for the elderly have said they want compensation from Minister of Health Pete Hodgson for the recently announced rise in the minimum wage. But he seems unmoved.
“I think aged-residential-health-care providers are already being paid sufficient for them to meet the new minimum wage. Nor do I think it is an appropriate thing for health-care providers to contact the government every time a price goes up. Whether it is petrol, electricity or wages.”
Didn’t government create the precedent, by refunding them for their Holidays Act labour costs? “That was a one-off,” Hodgson replies, for a particular policy change. The minimum wage, raised every year that Labour has been in office, strikes him as different. Much of the sector, he believes, is profitable enough to cope. “The profit levels of some of the providers, plus the price for which the facilities change hands in the corporate sector, indicate that the financial pressure on the aged-residential sector may be less than the Healthcare Providers Association [an industry lobby group] would have us believe.”
That said, Hodgson freely concedes that both at-home and rest-home care for the elderly is “still probably underfunded” by government – yet he is coy about what he plans on doing about it. In last year’s Budget, $71 million in extra funding was provided – but some of that was back payments to District Health Boards, leaving only a $38.5 million direct injection. Logically, given inflation, doesn’t this mean the government needs to inject at least $40-50 million in this year’s Budget? After some hedging, Hodgson agrees. “You’re probably right, but I haven’t tumbled the numbers. And if I had, I wouldn’t tell you.”
It is an explosive issue, given the ageing population. The sector is rapidly being corporatised, with many charitable and religious providers being bought up and/or forced out. Belatedly, the government’s emphasis has been on improving the lot of those workers caring for elderly people living at home – a cheaper option than rest-home care.
About time. Ten years ago, the Court of Appeal ruled that those carers were employees, not contractors – but many must still pay for their own petrol, and file their own tax returns. Rob Haultain, the aged-care specialist for the NZ Nurses Organisation, believes vastly increased government funding is the only way to ensure that proper pay rates, training and staffing ratios eventually prevail in the sector. Currently, the pay rates for carers in rest-homes lag as much as 50% behind the $16.50 an hour that health assistants with a few years’ experience receive for doing the same work in public hospitals.
Down at the coalface of caring, the work is physically and emotionally demanding. “We do everything the word ‘care’ means,” says Genevieve, a 40-year-old caregiver in Hamilton. “We clean people, shower them, we brush their teeth. We see to all their needs, spiritually as well.” In 1993, she paid her own way through a one-year, care-for-the-elderly diploma course. Today, it earns her only 50 cents an hour above the minimum wage. She sits with residents while they are dying. “You bring that home. It can’t help affect you, yet we have no one to help us through.” Still, she loves the work. “It’s like they could be your own nana or grandad, eh? You know, we’re all going to get old one day.”
On best guesstimates, about 25,000 people are employed in New Zealand as residential-caregivers for the elderly. Their pay tends to hover on, or just above the minimum wage. In a 2004 survey carried out by the Nurses Organisation in 2004, more than than 70% of those caregivers surveyed earned only $10-12 per hour. Of these, over one third were earning less than $11. Fewer than 1% were earning over $14.01 per hour.
At Healthcare Providers, chief executive Martin Taylor denies that the sector is presenting government with a begging bowl to cover its own legitimate labour costs. “Not at all. The Minister has admitted there is a gap in the funding.” As he sees it, those Australian investors who are now buying up New Zealand rest homes (at a premium) are merely “awash with capital” – and the rush does not signify that the sector is unduly profitable.
“The money to be made from aged-residential care,” he insists, reaching for a June 2005 independent report as corroboration, “is not high.” Well, some of it is, he concedes. Retirement villages are highly profitable. The aged-residential care, hospital and dementia units attached to them, though, are not – and these function more as what Taylor calls “loss leaders” to help to sell the retirement villages. “There are no profits to be made in the provision of care.” And, he concludes, that is the part of the service most affected by the minimum wage rise.
Out in the wider economy, Labour Minister Ruth Dyson feels comfortable about the likely impact of the minimum wage rise, due on March 27. Then, the adult minimum wage will rise to $10.25 an hour and the minimum youth wage – for 16- and 17-year-olds – will increase to $8.20 per hour, still only 80% of the adult minimum, often for the same work.
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