Childcare workers scrap strike after government agrees to fund pay rise

Childcare workers have scrapped a plan to walk off the job in July after the federal government agreed to fund a 15 per cent pay rise for another 18 months at a cost of $3.6 billion.

The wage rise was initially funded in 2024 and applied to the pay packets of about 200,000 early educators, but was due to run out in November.

The most recent federal budget in May did not clarify the scheme's future, infuriating the United Workers Union (UWU), which represents childcare workers.

The federal government had hoped a judgment from the Fair Work Commission to raise the wages for female-dominated industries would kick in, forcing the private sector to pay for the wage.

But the commission delayed the rollout of the wage increase because of concerns from employers who said they would struggle to take on the cost.

The Australian Childcare Alliance said daycare fees would shoot up unless the government extended its wage subsidy, warning providers would be faced with the choice to either hike fees for families or cut wages and risk losing staff.

UWU national president Jo Schofield said the announcement made the pay rise essentially permanent by bridging the gap until the Fair Work Commission enforced the gender undervaluation pay rise in full in 2029.

"Early educators know only too well what the sector was like before this pay rise came into force in December 2024, and there was no way they were going backwards," she said.

Wage increases tied to safety standards

The additional funding will cost taxpayers $3.6 billion over 18 months and be paid on the condition that early childhood centres meet the National Quality Standard.

Centres will also be required to limit fee increases for families, just as they were when the scheme was announced in 2024.

The wage increase will be offered to employees working at family daycare at residential properties for the first time.

The government said the initial pay increase in 2024 had boosted the childcare workforce by 20,000 workers and decreased job vacancies in the sector by almost 31 per cent.

A survey conducted by the childcare union in 2024 estimated that more than 60 per cent of early childhood educators planned to leave the sector within three years.

Without the $3.6 billion cash injection and the 6 per cent rise to the minimum wage last month, the government said childcare workers could have been $410 per week worse off.

Education Minister Jason Clare said the pay increase had already proved beneficial to families.

"Turns out if you pay people more, more people want to do the job," he said.

"We're taking the next step today, tying this funding to safety standards."

Thousands of workers to receive pay rise

Before the government made its initial announcement to fund an increase to childcare workers' wages in 2024, the Fair Work Commission had already found people working under the Children's Services Award were being underpaid.

The commission had identified five sectors for investigation for gender-based undervaluation, including childcare as well as disability and support services.

Although workers were awarded an increase of between 15 and 23 per cent, depending on their classification within the award, the rollout of the change was delayed after industry groups said childcare operators would be unable to pay the hiked wage bill.

The sector and workers eventually agreed to a progressive rollout of the pay increase, with the final rise to happen in June 2029.

That means that although the government's funding runs out in November 2028, workers will not face a pay cliff as they would already be earning more through their standard wages.

In a submission to the review, the government had urged the commission to speed up the rollout of the increase so that the private sector would take over when the initial funding ran out this November.