The failure of the Commonwealth to confirm that it will maintain funding for community service organisations could threaten up to 12,000 jobs in that sector, at a moment when those services are critical to Australia’s pandemic-damaged economy.

That’s the conclusion of new research on the economic importance of Commonwealth pay equity funding, conducted by the Centre for Future Work at the Australia Institute.

The federal government has been stalling on whether it will continue $576.5 million in supplemental funding for federally-supported community services, currently set to expire in the current (2020-21) financial year.

The special funding was part of the Commonwealth government’s legislated 9-year timetable to phase in pay equity wage adjustments in community services.

If that funding is not renewed (either by incorporation into a higher level of core funding for affected organisations, or through the extension of explicit pay equity supplements), the resulting funding shortfall will undermine and reverse the progress that has been made toward pay equity since the 2012 pay equity order.

The loss of federal pay equity supplements would inevitably produce some combination of staffing cuts and wage cuts, as organisations respond to such a significant loss of funding.

If experienced fully through staff cuts, the end of federal supplements would result in the loss of close to 12,000 jobs in federally-supported community organisations.

Alternatively, if the brunt of the funding cut is experienced through effective wage reductions (achieved through a range of potential channels described in the paper), it will reduce annual incomes for federally-funded community service workers by as much as $15,000 for full-time staff.

The implementation of pay equity in community services has made a measurable difference to Australia’s (slow and uneven) progress toward closing the gender pay gap.

The Centre for Future Work report found that the health and social services industry (which includes these community service organisations) has reduced the gender pay gap by more than any other industry in the years since the pay equity reform was announced. Those past gains will be undermined and reversed unless federal funding consistent with new pay equity norms is quickly confirmed