Labor’s 20% wage increase promise: How will it impact your pay?

In light of the Australian Labor Party’s (ALP) recent announcement to promise to fund educator pay increases equal to $11,300 over the next eight years, which is roughly equivalent to a 20 per cent increase in salary, The Sector has run the numbers to understand in more detail how this policy will affect early childhood education and care (ECEC) educators directly.

 

The announcement presents a significant opportunity, not only in terms of remuneration for educators, but to elevate the perception of ECEC within broader society. Several pieces of commentary in relation to the announcement have been made, outlining the significance of the announcement for the sector as a whole.

 

At this juncture the precise mechanism for implementing the plan is unclear but regardless of how it is implemented the ALP have committed to funding the “top up” completely.

 

In order to reach our conclusions on the impact of the policy on annual wages we have made the following assumptions:

 

1. The Modern Award increases at 3.0 per cent each year for the next eight years
2. The ALP proposal is equivalent to 2.35 per cent per year for eight  years
3. The ALP top up starts at the beginning of 2020/21 Financial Year (i.e: from July 1 2020 – June 30 2021)
4. We have used the current Children Services Entry Level awards as a starting rate to determine calculations.

 

How will the proposed changes impact Certificate III Award rates?

 

An educator with a Certificate III in Children’s Services starting out in the ECEC sector currently earns $22.04 per hour, or $43,545 per year.

 

On July 1 2027 an educator with a Certificate III starting out in the ECEC sector would expect to earn $28.76 per hour without the ALP top up and $34.44 per hour with the ALP top up.

 

This increase in hourly rate is equivalent to an annual increase of $13,271 without the ALP top up and a $24,609 increase with the ALP top up.

 

So, the ALP top up is worth around $11,237 in annual salary to a Certificate III qualified educator starting in the profession in 8 years from next year.

 

For those educators holding a Certificate III who are already in the profession, the impact of the ALP top up will be felt in the same way as it would for a starter, with the percentage increases being identical and building over time.  

 

The impact of the increase would become more pronounced over time with the same 20 per cent increase over and above the Modern Award experienced by July 2027.  

 

How do the proposed changes impact Diploma Award rates?

 

An educator with a Diploma in Children’s Services starting out in the sector currently earns $23.62 per hour or $46,674 per year.

 

On July 1 2027 an educator with a Diploma starting out in the sector would expect to earn $30.82 per hour without the ALP top up and $36.91 per hour with the ALP top up.

 

This increase in hourly rate is equivalent to an annual increase of $14,225 without the ALP top up and a $26,269 increase with the ALP top up.

 

So, the ALP top up is worth around $12,045 in annual salary to a Diploma qualified educator starting in the profession in 8 years from next year.

 

For educators holding a Diploma who are already in the profession, the impact of the ALP top up will be felt in the same way as it would for a starter, with the percentage increases being identical and building over time.  

 

The impact of the increase would become more pronounced over time ultimately arriving at 20 per cent in July 2027.   

 

More information about the announcement made by the ALP is available here.