While Metlifecare gives its staff a major pay rise, other aged care providers are struggling to cover costs.

The company is giving its workforce a 7.7 percent average pay rise, after recording a 78 percent rise in profits in the year to June.

But Aged Care Association chief Simon Wallace said most "mum and dad" providers don't have retirement units to subsidise their care operations.

"They're hamstrung by a contract with Government that really limits what they can pay their caregivers."

Most carers will receive a pay rise of 12 to 14 percent.

Simon Wallace said that would be a tough ask for smaller operators dependent on Government subsidies.

"Our employers would dearly love to pay our caregivers more, it's just the Government funding does not allow us to do that."

The West Coast District Health Board is closing its Kynnersley Rest Home in Westport due to a steady fall in demand.

Unions have been encouraging other aged care operators to follow the lead of Metlifecare.

Service and Food Workers Union advocate Alastair Duncan said the pay rise is exactly what they've been asking for.

He said at a time of very low Government funding, it's good to see a listed operator make a solid investment in its staff.