The $2 billion settlement to increase wages for care and support workers in the aged care and disability sectors has been lauded as groundbreaking, but Prime Minister Bill English warned it will be a high hurdle for other sectors to follow suit.

English and Health Minister Jonathan Coleman set out the details of a Government settlement with unions for aged care and disability workers - a package which means from July 1, the wages of about 55,000 workers will increase from $16-$18 up to between $19 and $27, depending on skills and experience.

The pay increase was described as the "biggest pay increase we'll ever get" by Kristine Bartlett who had taken the case, and also set an important precedent.

It is the first settlement under pay equity principles in recognition that some occupations dominated by women workers were paid less than men doing jobs which required similar levels of skill.


English said he expected some other sectors to lodge similar pay equity claims, which would be dealt with by a new process for resolving pay equity claims rather than direct Government negotiations.

"The hurdles will be pretty high. This is fairly unique set of circumstances - it's not readily or easily applicable outside of government for instance."

Legislation to introduce the new pay equity process would go through Parliament this year, and provided for claims to be settled by bargaining rather than in the courts as well as setting out the criteria to be applied.

The education support workers lodged a claim last week.

English also sent a hint other professions in the health sector such as nurses should not expect a flow-on pay increase. "This settlement does shift [care workers'] pay up. They will be closer to the rates of other groups, and I'm sure those other groups will accept that the point of such a negotiation was to change relativities."

English said the $2b cost over five years did affect the Budget, but it had been a priority.

Coleman said it would be costed by extra funding for Health and ACC.

However, it was also possible there would be fee increases of $60 - $100 a week for about 11,000 people in rest homes whose assets were over the $220,000 threshold to qualify for any Government subsidy - one third of the 33,000 in rest homes.

Current residential care rates were $884 - $971 a week.

"You can't have such a massive wage rise across such a huge group of workers without there being some uplift in costs right across the board. But this is a massive, historic $2 billion settlement which is going to make a massive difference to 55,000 of the lowest paid workers in New Zealand."

Health Minister Jonathan Coleman with rest home worker Kristine Bartlett after the carers' pay equity settlement announcement. PHOTO/Audrey Young
Health Minister Jonathan Coleman with rest home worker Kristine Bartlett after the carers' pay equity settlement announcement. PHOTO/Audrey Young

Coleman said any fee hikes would be determined in annual Aged Care Residential Care contract negotiations between DHBs and providers. Those whose costs were partially subsidised were unlikely to be affected.

The Government has to pass legislation to implement the settlement and the unions have to get it ratified by their members, but the mood was jubilant at a union celebration over the road from Parliament after the announcement on Tuesday.

Cee Payne of the NZ Nurses' Organisation said the aged workers fight had resonated with the wider public, who believed it was right and long overdue. It would help address the high level of staff turnover in the sector and that would have benefits for clients, who would be cared for by happier and more experienced staff.

E Tu spokesman John Ryall, who led the negotiations for the union, said the Government should be thanked for deciding to enter negotiations rather than leaving it to be dealt with by the courts, a process which could take years.

He said it represented a massive step toward gender equality.

"This is a good thing, not just for low-paid undervalued women, but for us all."

English acknowledged the unions for a "constructive approach" in what he described as tough negotiations and said the increases were just reward for a dedicated workforce which had been underpaid in the past.

English said the settlement could have flow-on effects to the private sector, but that would be up to up to those employers. Business groups had been involved in the new process for pay equity claims, but some businesses might not be able to afford such increases.