Pay Parity fact sheet

19 March 2023

Who funds early learning providers?

The Minister of Education determines the amount of grants to providers, and how they’re calculated.

Where else does early learning providers’ revenue come from?

Centres may also derive some of their operating revenue from fees or donations by the parents and whānau of attending children.

Nearly a quarter of centres represented by the Council operate in disadvantaged areas where parents cannot afford to pay higher fees. Even in other, less disadvantaged areas, charging parents higher fees to recoup increased costs is not always possible, as many centres have already increased their fees recently as much as parents are prepared to pay - any further increases are likely to result in parents choosing to move their children to different and cheaper childcare arrangements.

What is Pay Parity?

In the May 2021 budget, the Minister announced an early learning pay parity initiative, aiming to achieve pay parity for certificated teachers working in education and care centres with their colleagues in kindergartens. The proposal offered providers a higher funding rate if they paid their certificated teachers as prescribed by the first six salary steps of the eleven steps under the Kindergarten Teachers Collective Agreement.

The Ministry defined Pay Parity as “the idea that certificated teachers in education and care services should be paid the same amount as teachers working in equivalent roles in kindergartens, and with the same qualifications and experience.”

How does it work?

After consultation, Pay Parity was reduced to the first five salary steps when it first came into effect on 1 January 2022, with salary step six coming into effect on 1 January 2023. In effect, this artificially capped the top pay rate of ECS certificated teachers to salary step five. Many teachers had more experience and qualifications which justified much higher salary steps.

Although providers could choose to opt into the Pay Parity or not, it was widely publicised by the Ministry, and teachers expected centres to opt in and thought any increased salaries they got would be paid for by the Ministry.

Given the teacher shortage, that expectation put centres under pressure to opt in for fear of losing their teachers and not being able to attract new teachers.

Centres that didn’t opt in would continue to be funded at a lower base funding rate that was standard prior to Pay Parity.

Teachers’ salary steps were determined by a combination of Previous relevant work experience, qualifications and on the job experience. Steps 10 and 11 are the maximum salary steps, depending on your qualifications.

What is Extended Pay Parity?

On 19 May 2022, the Ministry announced Extended Pay Parity, which provided for an even higher funding rate at or above salary steps 1-11, to be implemented from 1 January 2023

However, salary steps 7-11 are only 97 - 88% of the KTCA salary steps, unlike salary steps 1-6, which were identical.

Funding gap

There is a fundamental disconnect between requirements to pay certain salaries (based on salary steps 1 – 11) and the funding rates. For most providers with teachers on higher salary steps, the funding provided is insufficient to cover the increased cost of meeting the salary steps for their certificated teachers.

Rising parent fees

The alternative is for providers to seek further funding from elsewhere like increasing fees they charge parents – many providers have already raised fees as high as possible given parents’ ability to pay, with cost of living increases an issue for many.

Outlook is unsustainable

Even if providers opt-in for Pay Parity or Extended Pay Parity, it’s not financially sustainable long term as teachers accumulate more recognised service and climb salary steps which entitle them to a higher salary.

Unsustainability will only increase over time as providers run out of costs to cut while salary costs continue to increase as their certificated teachers progress up the salary steps year after year until they hit the cap at either salary steps 10 or 11.

Experienced teachers will become unaffordable
Experienced teachers will be less employable due to the increased cost of their salaries due to the Funding Gap under the Policies. Providers wanting to employ or retain older and more experienced teachers will need to cut costs in other ways, including moving to lower teacher to child ratios (while still meeting regulatory requirements) to be able to afford their higher salaries. Centres are also cutting lunches for children, and cutting teacher benefits such as professional development.

Alternatively, given the Funding Gap, older certificated teachers will be paid lower salaries by ECS which have not been able to afford to opt-in.

Discrimination by age

The effect of the funding gap is commercially disincentivising providers from employing older certificated teachers with more qualifications, recognised service and previous experience who are on a higher salary step.

Although Pay Parity was intended to benefit all early learning teachers, it in fact disadvantages older teachers with the qualifications, recognised service and experience to place them on a higher salary step.

In contrast, younger certificated teachers are always cheaper to hire to meet their teacher to child ratios, as they will be on lower salary steps.

The practical effect of Pay Parity has been and will be discrimination on the basis of age amongst certificated early learning teachers.

Human Rights breach

The Minister is required to comply with the New Zealand Bill of Rights Act 1990, and cannot directly and/or indirectly discriminate on any of the grounds prohibited by s 21 of the Human Rights Act 1993, including on the basis of age.


Who is the Early Childhood Council?

We represent represents early childhood education providers

As of 6 March 2023, the Council is New Zealand's largest early childhood employers' organisation, with 838 financial members operating 1,337 licensed independent early childhood education centres (known as Education and Care Services (“ECS”)). Of these ECS, 26% are community owned and 74% are privately owned.

The Council’s purpose is to represent the interests of independent ECS and promote the provision of quality early childhood education services.

The Council’s members currently employ over 7,000 staff and provide early childhood education for over 50,000 New Zealand children. The Council represents approximately 50% of all ECS across New Zealand.

Key stats

2021 census data shows there are approximately 2,736 licensed education and care centres in New Zealand, employing approximately 32,985 teaching staff, or which 23,133 are qualified

Teachers in education and care make up over 78% of all teachers across early learning, with Kindergarten teachers making up around 17%.

Over 77% of early learning teachers are aged 31 or over, 46% are aged 41 or over, while approximately 97% of early learning teachers identify as female

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