The Federal Government has placed conditions on a 15 per cent pay rise for early childhood educators.

The Albanese Government has announced a significant 15 per cent pay rise for Early Childhood Education and Care (ECEC) workers, aiming to address wage inequity and support the vital role these educators play. 

This increase, set to be phased in over two years, includes a 10 per cent rise from December 2024, followed by an additional 5 per cent in December 2025. 

However, this wage boost is contingent on childcare centres agreeing to limit fee increases.

The $3.6 billion investment, part of the government's broader ECEC reforms, is designed to ensure that workers are fairly compensated without imposing higher costs on families. 

To receive funding, ECEC services must commit to capping fee increases at 4.4 per cent over the next 12 months. 

This condition aims to protect parents from further price shocks, addressing concerns raised after previous subsidy increases were offset by rising childcare fees.

“Early educators shape lives and change lives. We can never thank them enough for what they do - but we can make sure they are properly valued and fairly paid,” Prime Minister Anthony Albanese said in a statement this week.

The wage increase is also expected to benefit the broader economy by improving access to quality early childhood education and care, thus boosting productivity and workforce participation. 

The childcare sector has faced staffing constraints, exacerbated by a recent 23 per cent pay rise for aged care workers. 

The government hopes the new conditions will help retain current educators and attract new employees, preventing further workforce shortages. 

The requirement to limit fee increases, however, poses a challenge for some centres, which may struggle to balance rising operational costs with the imposed fee cap.

Minister for Education Jason Clare has described the new policy as a “cost-of-living double whammy” by increasing wages for workers while keeping prices down for families. 

The government also says it aligns with its long-term goal of establishing a universal childcare system, supported by findings from the Productivity Commission's final report on early childhood education and care, which is yet to be released. 

Additionally, the government will provide retention payments for two years while the Fair Work Commission finalises its gender undervaluation priority awards review.

Advocates have welcomed the wage increase but continue to urge the government to scrap the activity test, which limits subsidised early childhood education hours based on parents' work schedules. 

This measure currently affects an estimated 126,000 children from low-income households, who miss out on early childhood education.