Almost A Million Care Jobs In The UK Pay Below Living Wage

Think-tank sets out a roadmap to a Living Wage for care workers

Two thirds of all care jobs in the UK (930,000 in total) paid below the living wage last year, according to a new report published today (Tuesday) by independent think-tank the Resolution Foundation.

The Resolution Foundation report, the culmination of a year-long investigation into pay and conditions in social care, is the first authoritative study of the costs and benefits of moving to a living wage for all care workers – a goal called for by several major enquiries, including the Kingsmill and Burstow reviews.

The report argues that pervasive low pay across the sector and tight budget constraints facing care providers means that paying a living wage to all UK care workers cannot realistically be achieved without additional public funding.

It finds that the gross public cost of paying a living wage to all UK care workers would have amounted to around £1.4bn last year (whether from existing local authority budgets or additional national funding). However, half of this expenditure is returned to the Exchequer through higher income tax and National Insurance receipts and lower benefit payments – resulting in an estimated net cost of just over £700 million. There is further potential for savings if wider benefits to the Exchequer are taken into account.

The report argues that paying a living wage is likely to lead to other benefits. Lower staff turnover would reduce recruitment costs (which can be as high as £3,500 per care worker) and stem the reliance on more expensive agency staff. Those receiving care would also benefit from greater continuity of care, as well as better quality provision due to a more stable and satisfied workforce.

While increasing pay is central to the recommendations, the report also outlines how insecure contracts and inadequate employee benefit packages, along with insufficient training, can impede the quality and continuity of care. Previous work by Resolution Foundation has also highlighted the scale of non-payment of the minimum wage and the problem of weak enforcement. Today’s report calls for progress on all these issues alongside pay improvements, in order to maximise the beneficial impact of increasing pay.

The Resolution Foundation acknowledges that the fiscal constraints facing central and local government are substantial – creating a very difficult context in which to be making the case for significant new resources. However, with costs amounting to just a fraction of a per cent of GDP, and the benefits evident not just for staff but for the quality of care, the report argues that overtime progress could be made if the resolve were there.

The report identifies and costs a possible roadmap towards a living wage over the course of the next parliament. This would have a net cost of around £250 million next year (if 40 per cent  of the gap between the National Minimum Wage and the living wage is closed), rising to an estimated £1.3 billion by 2020, when the entire gap would be closed (both figures are in 2014-15 prices). Part of the challenge is increasing pay so it catches up with a Living Wage that itself will be rising year on year, and is projected to be above £10 per hour by 2020.

Laura Gardiner, Senior Research and Policy Analyst at Resolution Foundation, said:

“There is a growing consensus that social care provision in the UK will reach crisis point if nothing is done to improve pay and conditions for this overstretched and undervalued workforce, who care for the most vulnerable members of our society. By analysing the costs and benefits of moving to a living wage for all care workers, we hope to inject much needed clarity and realism into a debate in which some treat a living wage in care as a costless aspiration, while others dismiss it out of hand as being unaffordable and just too difficult.

“Our report aims to provide the kind of figures needed to start thinking seriously about how to tackle pervasive low pay in a sector that for too long been overlooked by policy-makers. While the investment required by government to make the living wage a reality for all care workers is substantial, we believe that the wider social and economic benefits create a compelling case for action.”