A while back, rest home care providers achieved a superb legal victory against the New Zealand government to increase their pay rates. The argument was that workers were denied equal pay on the basis that the industry, which consisted mostly of women had lower wages than equivalent male-dominated industries. The wage increase was supported with a $2 billion cash injection to the aged care sector from the government.
Despite government funding of the pay increase and the lobby group representing companies providing aged care services endorsing the settlement, there are reports of costs being passed on to residents and their families. Today, there is a report that Aberleigh Rest Home in Blenheim will be restructuring their workforce, where care workers are replaced with lower paid “home assistants” who would not be covered by the equal pay ruling.
Such a development is usually met with the usual boilerplate rhetoric from the political right who claim that wage rises will hinder businesses and increase costs. But before we shed a tear for the poor, embattled rest home owners, let’s consider some of the backround behind Aberleigh Rest Home:
Aberleigh is operated by Dementia Care NZ and its co-owners have been in the sector since 1999. Dementia Care NZ owns 9 rest homes across New Zealand and are not publicly listed on the sharemarket, so information about their earnings isn’t accessible to the public.
It is worthwhile to consider the financial situations of some publicly traded aged care providers:
Ryman Healthcare: One of the largest aged care providers in the country. A cursory glance of their press releases illustrates that they have made record profits for the last two years. Indeed. many New Zealanders would have first heard about Ryman in the investment section of the newspaper. And with good reason, shares in Ryman have an excellent return on investment.
Oceania Healthcare: A more recent listing on the NZ Stock Exchange, Oceania reported a net profit in the year to May 31st of ~$45 million. Currently shares have gained 20% since the company was listed on the NZX.
Bupa: An international aged care company which operates rest homes in NZ. In the Australia/New Zealand market unit, their underlying profit for 2016 was $344 million. Their share price on the LSE has increased by ~25% over the past 5 years.
Judging from these market performances, it is clear that the aged care is a highly profitable sector and a great investment for bitter millennials! It’s also clear that these enterprises are not in a desperate financial situation where a wage rise would cripple them, especially when the NZ government claims that it has fully funded the cost of the pay rise.
Without seeing the specifics of Dementia Care NZ financial details, it’s hard to tell if their decision to circumvent the equal pay ruling was done to keep the business afloat or to preserve profitability. However, we may infer that Dementia Care NZ has less than $20 million in assets and has revenue is below $10 million since they are not filing financial statements with the Companies Office.
Given that approved aged care providers receive funding from the Ministry of Health, I believe that the public should have access to the financial details of all these providers. Regardless of the financial situation of Dementia Care NZ, the simple fact of the matter is that their employees should be given this pay rise since it is mandated by law. That the company is trying to avoid paying workers their due serves to reinforce the negative perception of an aged care sector that milks the elderly and their families for the enrichment of shareholders.
The nature of the aged care sector shows how far our society has degraded over the past three decades. Our elders are no longer valued for who they are, but valued for the money that the wealthy and powerful can extract from them. I can only hope that the media spotlight and public pressure will force Dementia Care NZ to do right by their employees and give them the pay rise that is their entitlement.