About 40 union members chanted and cheered as passing motorists tooted in support of their cause.
Workers are seeking a 2% wage rise, and are fighting to be paid hourly for overnight stays, rather than a flat rate of $34 for the shift.
Yesterday's picket line, outside IHC in King Edward St, aimed to raise awareness of the dispute.
Service and Food Workers Union negotiator Barbara Osborne said the hourly rate of $14.20 was less than that of cleaners.
IHC has said it cannot afford any wage rise.
Mrs Osborne said workers carried out a range of tasks for service users, including personal care, tube feeding, food preparation, managing finances, giving medication, cleaning and organising activities.
Workers were on strike for two hours yesterday.
The union was also withdrawing night cover for two shifts this week, last night, and tonight, with more stoppages planned next week.
IHC had extra funding it was not passing on to workers, Mrs Osborne told the Otago Daily Times.
In a statement, IHC chief executive Ralph Jones said a 1.2% funding increase had already been swallowed by increased overheads.
Demanding pay increases during tough economic times was unreasonable.
"The union is out of step with most New Zealand workers who are feeling the effects of the tough economic climate."
Mr Jones was grateful for the nearly 50% of non-unionised workers who made it possible for services to continue as usual.
