Much of the gender pay gap can be explained by different pay scales in male- and female-dominated industries, which raises questions of how society values health, education and social services. In a landmark ruling, an Equal Remuneration Order (ERO) was granted to social and community service workers to legislate a much-needed pay rise across the sector. In today’s piece, Natasha Cortis of UNSW shares insight from research she conducted with Megan Blaxland on the role that government supplementation has played in ensuring the sector could maintain quality service while also implementing the award. More information can be found in their report: Challenges for Australia’s Community Sector: ERO Supplementation.

A companion piece to this analysis details the sustained advocacy with the Morrison Government and calls for meaning engagement and protection of past gains for equal pay.

Despite the concerted efforts of feminist activists, policy makers and trade unions, gender pay equity in Australia remains an elusive goal. Legal and industrial changes made over several decades have failed to shift the pay gap, and women’s average full-time weekly earnings continue to hover around 86% those of men. On average, each week men in full time employment enjoy a pay advantage of $243, which translates into higher accumulated wealth and economic power for men over the life course. In large part, Australia’s pay inequity problems stem from our highly sex segregated labour market, as much low paid work is found in female-dominated industries and occupations, including in social and community services, early childhood education and care, and aged care.

The landmark outcome of the Equal Remuneration Case for Social and Community Service Workers, 2010-2012 offered the best chance yet to change this and to close the gender pay gap. Through the case, advocates, led by the Australian Services Union, secured wage rises for staff across a highly feminised industry. The Fair Work Commission’s decision recognised the way gender-based undervaluation has held down wages in social and community services. The Commission recognised that historically, wages have been influenced by gendered assumptions that women’s work in supporting, nurturing and developing others is natural, or performed out of duty or altruism, and not for pay. To rectify this, the Commission made an Equal Remuneration Order (ERO), which required employers to phase in a series of pay rises for staff employed under the Social, Community, Home Care and Disability Service Award (SCHADS Award), with the final increment set for December 2020.

Community services have a long history of being underfunded and overstretched. Government inaction may exacerbate this problem, leaving dangerous gaps in service provision. Photo by conor rabbett on Unsplash

The ERO was an exceptional and hard-won victory, which raised the very low pay rates of around 200,000 workers who deliver care, support, early intervention, advocacy, community development and other social purpose activities. What made the case so impactful was that alongside protracted legal proceedings, advocates successfully campaigned to secure government agreement to cover increased wages for workers in services contracted to deliver government programs. This ensured that a large chunk of the community sector – those delivering services on behalf of government – would be able to comply with the new wage rates. The Australian Government in particular made an explicit commitment to provide supplementary funding for their contracted community service providers. The Commonwealth collected data and worked out formulas to establish the share of wage increases it would pay, and set up a special account to ensure availability of funds for providers delivering 41 government programs.

For the past eight years, supplementation has been essential to the community sector’s capacity to comply with the ERO. However, research we conducted roughly half way through the phase-in period indicated that while arrangements were welcome and employers supported higher pay, many found government funding arrangements to cover the ERO were less than ideal. CEOs told us how supplementation had not been made available by all their funders or for all programs; and that levels of supplementation were insufficient to cover the actual wage costs they incurred to recruit and retain staff. Some organisations subcontracted by other non-profits found that supplementation paid by government to their direct contractors wasn’t necessarily passed on through supply chains.

But while supplementation arrangements have perhaps not been ideal for every organisation, these arrangements have, on the whole, provided a way to ensure the ERO could be implemented, and that pay equity could become reality. By increasing the sector’s capacity to cover Award increases, supplementation payments have underpinned compliance with the Commission’s historic order to address the gender-based undervaluation which has long held back the industry, and its female-dominated workforce.

The eight year phase-in would seem a more than reasonable timeframe for government funders to transition and ensure new pay rates could be incorporated into the base rates of funding agreements, so that supplementation is no longer required. However, with the ERO now almost fully phased in, the sector has not been assured their increased wages will be either absorbed into base rates for all government programs, or that supplementation will continue. Without government commitment, this is likely to squeeze community sector finances even further, and hold back progress towards equal pay.

Our recent survey research conducted in collaboration with ACOSS and the CoSS Network captured perspectives of 406 leaders of Australia’s community sector organisations on how they would be affected by the cessation of Commonwealth supplementation. These CEOs, Executive Directors and other organisational leaders told us how this would amount to a funding cut. CEOs feel they will have little choice but to reduce staffing levels, service provision and by extension service quality should government support for the ERO be lost. They told us that cessation of supplementation would make it very difficult to attract and retain quality staff, and to meet the KPIs set in their funding agreements. As one CEO explained:

If funding bodies don't honour the ERO rises after 2021 and we revert to funding levels prior to the ERO supplements we will need to reduce worker's hours to meet our budget, [and] therefore reduce face-to-face support to clients.

Another explained:

Unless supplementation amounts are incorporated into our contract amount, we will need to either utilise our savings to cover salaries or will need to restructure programs and delivery modus, reducing further the number of workers.

And another explained how funders’ expectations were out of step with the rates paid:

Our funders expect we have highly qualified staff reporting to high levels and getting significant outcomes from the most complex of clients but will not pay above SACS 2 or 3 in the grant for staff because our grants are stuck in the early 2000's. Good services fold over the years because they lose staff to new programs with higher wages not because they were not effective or needed or valued in the community.

Delivering services on behalf of government is not without financial risks for the not-for-profit sector. Overwhelmingly, community organisations need appropriate wage levels to be built into base rates in government funding agreements. This is a necessary underpinning for their ability to recruit and retain quality staff, deliver quality services, and remain viable whilst delivering programs on behalf of government. Until legal wage levels are absorbed into base rates, supplementation should remain part of the patchwork of funding arrangements through which community services are resourced.

Given how difficult it has been to achieve the ERO, and the obstacles which have faced subsequent campaigns in other low paid feminised industries, it is imperative to hold onto the gains made.

Acknowledgements: The quotes provided draw on research collected for the Australian Community Sector Survey, a collaboration with ACOSS and the COSS network, with support from Community Sector Banking. You can access the full report, including data, here. I am grateful for suggestions from Dr Megan Blaxland, a co-researcher on the Australian Community Sector Survey.

This post is part of the Women's Policy Action Tank initiative to analyse government policy using a gendered lens. View our other policy analysis pieces here.

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