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 by independent think-tank the Resolution Foundation.
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.
The report argues that paying a living wage (£7.85/hr outside London, £9.15/hr in London) 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.
The Resolution Foundation acknowledges that the fiscal constraints facing central and local government are substantial. 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 over time progress could be made if the resolve were there.
Laura Gardiner, Senior Research and Policy Analyst at Resolution Foundation, said: “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 has 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.”
