Wages, labour woes for aged care sector

Much of the conversation around Western Australia’s worsening labour and skills shortage has concerned its effects on the mining, agricultural and construction sectors.

With a state-wide truck driver shortage preventing grain handler CBH Group from meeting its shipping commitments and leaving millions of tonnes of iron ore sitting idle, the state government had little choice but to take action.

On the eve of the new financial year, Premier Mark McGowan will convene a Skills Summit: a meeting of industry leaders to determine how to address the existing skills shortage and ensure WA remains globally competitive.

Largely missing from broader discussions, however, has been the aged care sector, which employed as many people as Rio Tinto, BHP, Fortescue Metals Group and Woodside combined last year.

A report by public policy consultancy ACIL Allen Consulting, released at Business News’ Sector Briefing event on May 28, has found the aged care workforce will need to grow by more than 60 per cent in the next decade if it is to meet forecast demand, while simultaneously grappling with a major system overhaul being implemented in the wake of the Royal Commission into Aged Care Quality and Safety.

The ACIL Allen report canvassed the key challenges facing the sector and quantified its social and economic impacts on the state, as well as the likely impact of implementing 126 of the royal commission’s 148 recommendations.

The report, commissioned by 10 major providers of aged care and home support services, predicts the number of jobs created by the sector’s expansion over the next decade will be greater than the number of full-time jobs created in WA during the past four years.

Bethanie chief executive Christopher How said the 60 per cent estimate was conservative, and had not accounted for new government-enforced minimum staffing rules, which will require residential aged care facilities to deliver 200 care minutes per resident per day by October 1 2023.

“All those in the aged care sector are very aware of the demographic shift; we have an ageing population,” Mr How said.

“The workforce that would be required to support that is significant and it’s disappointing the sector hasn’t featured as heavily in the conversation about the labour shortage, but I understand why it’s a blackspot.

“It’s important to have conversations around the standard of aged care in WA, but if we don’t have the people to deliver that, then it’s no good.

“That said, the state government has been really responsive and we’re working collaboratively to address the workforce issue.”

Hall & Prior chief executive Graeme Prior told Business News the sector had struggled to attract and retain workers over the years, particularly when compared to mining and construction.

While this has been linked to the low wage rates, ACIL Allen’s report revealed a host of other contributing factors, including work-related stress, the lack of career progression, and an absence of up-skilling opportunities.

Mr Prior said he remained optimistic, however, with the report noting that, unlike other industries, employment opportunities in aged care offered stability.

“The sector has to be re-engineered and reconfigured to meet the growing demand,” Mr Prior said.

“It’s going to present a real challenge in the future, and the battle for the workforce is on.

“This report highlighted the sector’s significant employment prospects and private investment opportunities.

“Demand is growing and it’s not cyclical like oil and gas; this is a permanent employment opportunity in a family-friendly job.

“However, our ability to retain staff is also reliant on migration, which is a problem when the international borders remain closed,” he said.

Border bother

The aged care sector has been heavily affected by the closure of the international border throughout the COVID-19 pandemic.

About 32 per cent of those working in WA’s residential aged care sector were born overseas, prompting concerns among industry that a medium-term shortage of workers in the sector could be heightened by changes to minimum staffing requirements.

With two-thirds of Juniper’s 1,850- strong workforce born overseas, chief executive Chris Hall said the inability of people to migrate to Australia was already presenting significant challenges for the organisation.

“As a sector, we provide long-term, extensive employment, but we’re experiencing enormous challenges and there is major competition among industries,” he said.

“We’re experiencing extensive challenges [with staffing] in the Kimberley, which has been impacted by the lack of migration and transient backpackers.

“And that’s happening now. The sector will need to employ three times the number of people it does now by 2050.

“I think it’s really important that we consider reopening the skilled migration scheme.”

Migration is just one of many challenges facing the sector, according to Mr Hall, who acknowledged that low wages was the major barrier to attracting and retaining employees.

Pay, value

Mr Hall said the royal commission had failed to adequately address the issue of wages.

While labelling the federal government’s budget allocation of $25.9 billion to the sector for the next financial year a “reasonable start”, Mr Hall said the sector needed the government to step up and provide more funding to deal with the current labour and wage issues.

“Staff in this sector are underpaid and undervalued, particularly given the nature of the frontline work,” he said.

“Our ability to attract workers is dependent on improved wages, making sure we can pay people adequately.

“There needs to be an increase in wages.”

Lavan legal partner Amber Crosthwaite, an experienced commercial lawyer specialising in the aged care and retirement living sectors, said a number of issues were hindering the ability to attract staff, but none more so than the industry’s wages rate.

“It’s quite unattractive,” she said.

“There are below award wages and it’s really hard work; it’s emotionally and physically demanding, and that’s not recognised in the wages.

“The wages need to come up. It’s hand-to-mouth stuff, but the wages cannot go up without funding behind it.

“We know that two-thirds of services are failing right now.

“There is no money to pay staff more unless the government funds that.”

Along with wage subsidies, Ms Crosthwaite said she believed the benefits of working in aged care, the transferable skills and the ability for career progression, needed to be better communicated.

“There are a lot of related sectors that you could draw from for the labour, including hospitality and tourism, but more work needs to be done to highlight that the skills necessary in those sectors would be transferable,” she said.

“People need to be able to enter the sector knowing that there is a career path for them, that they can work their way up to some sort of specialisation or into a management level role.”

Education

Making the training required to embark on a career in aged care more attractive has been a key focus of the state government in recent months.

In April, it launched a new pilot program developed in partnership with industry to create a pipeline of workers in the social assistance and allied health sector.

The Ageing and Disability Job Ready program, which had its first intake of students last month, is being delivered by TAFE campuses and private training providers.

Through the program, employers can host a work placement student and access state and federal government wage subsidies, provided the student transitions into a traineeship.

Mr Hall commended the state government for stepping up on skills and traineeships, arguing it was leading the charge nationally.

However, it was important the pre-traineeships and courses were geared towards a career, he added.

Mr How agreed, and said Bethanie was one of many organisations in the sector already having conversations with the Department of Training and Workforce Development because the workforce issue was “front and centre”.

Impacts

While the ACIL Allen report has provided tangible data for the sector to highlight the depth of its challenges to government, perhaps the most significant finding in the report was the breadth of the sector’s social and economic impact.

The report found aged care was a significant part of WA’s economy, directly contributing $2 billion each year and accounting for one in every seven dollars of activity across the state’s $15 billion health care sector.

The ACIL report also said the economic contribution was only part of the picture, and that it was critical to consider employment and taxation revenue and the effects on those receiving services and their family and carers.

The consultancy developed a framework to measure cost savings on health care, improved health outcomes, direct value added through expenditure, carer workforce participation, and the relief of direct care requirements for next of kin and family members.

Across the five impact channels, it is estimated residential and community aged care services delivered $5.3 billion in benefits against a services cost of $2.5 billion last year, resulting in a net benefit of $2.8 billion.

That equates to a return of $2.11 for every dollar spent on aged care and community care services, a calculation Mr How believes will bring the sector’s role in the economy to the fore and help it to drive conversations with the government aimed at addressing the labour issue.

“We commissioned the report for insight and to help us have those conversations at a state government level,” he said.

“The biggest surprise has been that the industry is much bigger than I anticipated, particularly in comparison to mining and agriculture.

“The social and economic benefits, coupled with the financial return, are just extraordinary.

“The other thing it highlighted was that those benefits are long term, not episodic, and that they have a ripple effect.

“It is also a sector that brings Commonwealth funding into the state, which sets it apart from other industries.

“The release of the report marks a significant milestone in the setting of a new agenda in WA, whereby the state government recognises the strength and the breadth of the industry, and we work together to get the best outcome.

“It’s about saying to the state government: ‘We are an important part of your economy, let’s continue to have these conversations’.”