Rest home cuts loom

Waikato rest home operators are contemplating job cuts and even closure in the wake of increased wages for elderly care workers.

In April, the Government announced a $2 billion package to address the pay inequity in the aged-care sector, an industry predominantly staffed by women.

The deal will see the hourly rate of more than 55,000 workers lifted to between $19 and $23.50 from July 1.

In a recent submission to the Health Select Committee, Simon Wallace, the New Zealand Aged Care Association’s chief executive, said the financial pressure pushed on to smaller operations would lead to closures, redundancies and fewer options for New Zealand’s ageing population.

He said an unnamed rest home in the Waikato would close, while others in Taranaki and Wellington were also weighing up their options.

‘‘A larger 80-bed facility in Hamilton is likely to make caregivers redundant in order to cut its losses and stay open.’’

But Sam Jones of private sector union E tu said the union pushed hard for appropriate funding in the settlement and there should be no excuse for cut hours or closure.

He said if rest homes face closure, then a shortfall ‘‘must have already been there’’, as wages should have no impact.

But the head of one Waikato rest home said the financial model used to underpin the wage increases is flawed, leaving operators to make tough calls.

Louis Fick, chief executive of Tamahere Eventide Home and Retire- ment Village, expects a lot of independent Waikato rest home operators to make staff cuts.

‘‘We had a meeting two weeks ago and that is one of the things that is on the table,’’ Fick said. ‘‘There were mostly independent or privately owned facilities there and everyone is in the same position. It’s especially difficult when you don’t have any other sources of income.’’

Tamahere Eventide Home and Retirement Village is a standalone charitable trust and employs 90 staff.

Fick declined to say if staff numbers at Tamahere Eventide will be cut. Reducing staff hours or decreasing services is being considered.

The $2b pay equity settlement will be funded over five years through increases in the Health and ACC budgets. Employers are expected to contribute $245 million.

Fick said the pay increases for agedcare workers is well overdue, but the Government’s financial modelling is flawed.

‘‘Caregivers need this [pay increase] and it should have been done years ago, but it wasn’t done in a planned and considered fashion.’’

The New Zealand Aged Care Association has welcomed the pay settlement but also argues the Government funding model is wrong and believes smaller rest home operations will be put under financial pressure, leading to closures and redundancies. Fick said staff cutbacks are inevitable. ‘‘If you’re not funded properly, you’ve got to bring your costs down within the funding levels. It’s just the reality. In the end, the people who should have benefited from the higher rates over many years could be at risk.’’