End of federal pay equity supplements could risk 12,000 community service jobs, research finds

By Shannon Jenkins

Thursday September 10, 2020

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Up to 12,000 community service jobs could be lost if the federal government fails to renew its financial support to the sector, a new report has found.

Authored by the Australia Institute’s Centre for Future Work director Dr. Jim Stanford, the report notes that the government’s indecision regarding the renewal of supplementary funding for pay equity comes as Australia’s economy is locked in an unprecedented downturn due to COVID-19.

“The willingness and ability of working families to re-inject their earnings into the economy through consumer spending is essential to any sustainable economic recovery,” the report says.

“At this moment, reducing compensation for community service workers by hundreds of millions of dollars per year, and/or eliminating thousands of jobs in the sector, would impose another blow that the Australian economy clearly cannot afford … it is vital that Commonwealth funding for pay equity in this sector be confirmed and extended.”

The government’s $576.5 million in supplemental funding for federally-supported community services is set to expire in the 2020-21 financial year.

The report argues that if this funding is not renewed — either by incorporation into a higher level of core funding for affected organisations, or through the extension of explicit pay equity supplements — the progress that has been made toward pay equity will be reversed.

“The loss of federal pay equity supplements would inevitably produce some combination of staffing cuts and wage cuts, as organisations respond to the significant loss of funding,” it says.

Stanford has warned that the end of federal supplements could result in the loss of close to 12,000 jobs in federally-supported community organisations.

“Alternatively, if the brunt of the funding cut is experienced through effective wage reductions it would reduce annual incomes for federally-funded community service workers by as much as $15,000 for full-time staff,” he says.

“To put up to 12,000 community service jobs at risk, or force community service workers to take a $15,000 a year pay cut in the middle of global pandemic and an economic recession is both heartless and economically self-destructive.”

The report also notes that the implementation of pay equity in community services has made a “measurable difference” to Australia’s progress toward closing the gender pay gap. The broad health and social services industry, which has a workforce predominately made up of women, has reduced the gender pay gap by more than any other industry in the years since the pay equity reform was announced.

“Those past gains will be undermined and reversed unless federal funding consistent with new pay equity norms is quickly confirmed,” the report warns.

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