Government backing for pay equity case to have limited private sector impact: Experts

Federal Government support of pay rises of up to 33% for social and community sector employees is likely to boost a union case in Fair Work Australia following a landmark ruling on gender equity, but a widespread increase on private sector pay is unlikely, industrial relations experts say.

The Federal Government, one of the major funders to the sector, has announced it will contribute $2 billion over six years to help boost the pay of 150,000 workers in the social, community and disability services industry. The pay rises are expected to be between 7-15%, with some pay potentially rising by 33%.

The average pay in this sector is $46,000 – well below the national average of $58,000. The case covers workers in residential care, family services, disability, aged and disability care workers, social workers and community services managers.

Prime Minister Julia Gillard has called on the states and territories, another key funder to the sector, to join them in putting aside money to help fund pay rises. Its commitment comes as the full bench of Fair Work Australia prepares to resume the case this month.

Industrial relations lawyer and adviser Peter Vitale expects the Government is trying to answer the question posed by Fair Work Australia about how an increase would be funded.

“I’d suggest there is an endeavour by the Government to neutralise this issue and try and convince the tribunal that it’s a non-issue,” Vitale says.

“On that basis, the Tribunal says it can be funded and we grant the claim or close to the maximum claim.”

On the private sector impact, Vitale says it’s difficult to predict, although “you would have to suppose there’s a least the prospect that this move will have an impact on private sector wage negotiations”.

But the fact that this group of workers has been identified as being paid less on the basis of gender makes this unique, he says.

“I’m not sure there’s any agitation from any other quarter to try and identify a group of women who are similarly affected,” Vitale says. “Unless there’s a basis for an equal pay case in another industry, then it may be the effect of this is fairly discrete.”

Simon Dewberry, a workplace relations partner at Allens Arthur Robinson, agreed.

“While the FWA pay equity decision case may apply some upward pressure on wages for low paid workers generally, and could result in the reduction of services and some job losses across the community sector over time, the decision will have limited impact on private sector employees as Federal and State governments fund the majority of community-sector programs,” Dewberry says.
 
Gillard told community sector workers in Sydney yesterday that “nearly 20 years since those first equal remuneration provisions were introduced, nearly three years since the Fair Work Act passed, two years since your unions brought your case, six months since Fair Work Australian found that you are not paid fairly”.

“And after hundreds of hours of detailed discussions between various parties, the Federal Government and the Australian Services Union now have an agreement on the way forward – a way forward to deliver fair pay for caring workers covered by this case.”

Gillard believes that the Government’s support will help persuade the industrial body.

“I do believe that the Federal Government, coming with the Australian Services Union, and other unions and we will be looking to be joined by responsible providers, I do believe that that will be a very persuasive voice before Fair Work Australia,” Gillard said.

“Fair Work Australia has already taken the first really big step and that is to say that these workers are underpaid and undervalued and it asks the parties to come back with a view about what should happen next and we’re going to raise our voices very strongly about what should happen next.”

In May, FWA ruled that gender had played a key role in workers in the sector generally being paid less than employees of state and local governments who perform similar work. It asked parties to make submissions on the extent to which gender has inhibited growth in the industry, and how to address that imbalance.

The industry was described in submissions to Fair Work as predominantly female and increasingly well-educated, with a high number of part-time and volunteer workers.

The 150,000-strong workforce is ageing, however, with low participation rates for younger workers.

FWA said that official figures showed that by the end of June 2009, there were more than 4,000 businesses in the social, community and disability services industry subject to the pay equity case, with most workers employed by not-for-profit organisations.

“We agree that it would be wrong to conclude that the gap between pay in the sector with which we are concerned and pay in state and local government employment is attributable entirely to gender, but we are in no doubt that gender has an important influence,” it said.

“Gender factors, particularly the ‘feminised’ nature of work in the industry and the fact that it is carried out mainly by females, are a contributor to low bargaining power.”