Low Pay in the Charity Sector

07 November 2017

This week is Living Wage Week. Living Wage Week is a great opportunity to raise awareness of the campaign, increase support, and highlight the impressive work that has been done so far. Although thousands of charities and funders have already embraced the Living Wage, low pay still remains a challenge in the sector.

Almost one in five working people – 5.5 million people – earn less than a real Living Wage.

Being paid the real Living Wage can be the difference between surviving and living. For some, it means having enough money to feed your family or being in pushed into food-poverty.   

The movement has been growing steadily for the last 15 years. There are now over 3,600 UK-accredited employers who pay the Living Wage and that figure is steadily increasing.

For the voluntary and community sector, thousands of charities and funders have already embraced the Living Wage too, but low pay in the charity sector remains an endemic issue.

The Living Wage Foundation’s new report, Low Pay in the Charity Sector, highlights that more than a quarter of charity sector workers (26.2%) are not being paid enough to live off as they do not receive the real Living Wage. Break this down further and there are some worrying trends. 30.4% of females earn less than the Living Wage, compared to 21% of males. By age group, young people aged between 18 and 21-year-olds are the most affected, with 69% earning below the real Living Wage.

People from BAMER backgrounds are particularly affected by low pay with Black/African/Caribbean/Black British respondents (30%) and ‘Other Asian Background’ survey respondents (62%) reporting earning below the Living Wage. Part-time workers are also more likely to be affected by low pay (42.7%) compared to just under a fifth (19%) of full-time workers in the charity sector.

It is of course ironic that charities which so often tackle social injustice head-on should be contributing directly to inequalities between and within their own workforces. Ironic, but perhaps not surprising. Ask charities about becoming Living Wage employers and the reply will often be the same: they’d love to but it’s out of their control.

The stark reality is that many charities just don’t feel they are able to increase wages to the real Living Wage and, even if they do, with an increasingly uncertain economic climate, they cannot commit to the Living Wage for future years. It is here that funders and commissioners have a very real role to play. In a recent survey of the Living Wage impact undertaken by many funders simultaneously, two organisations who were receiving a Living Wage grant from People’s Health Trust explained why they did not feel able to commit to this across their organisations:

“If we paid the Living Wage, we would have to close our charity totally, we keep ourselves going in an extremely competitive market, providing vital support to the population...Our statutory funders will not fund us at the Living Wage at all…”

“We would love to be a Living Wage employer, both the CCG and …the Council would question us paying above the sector average.”

Both of these statements are illustrative of the issue that charities face: being largely dependent on funders and commissioners to agree to pay the Living Wage.

This creates a cycle of low pay – be competitive to remain in business and provide the vital support locally but, by doing so, you drive down the costs of salaries. The thinking then becomes engrained in the culture. How many times have I heard a charity say that some work and service is better than none? It becomes an accepted norm to pay low wages.

Two years ago, People’s Health Trust, working with Living Wage Foundation and a group of funders set out to look at paying the real Living Wage through the grants they made. We started out as five. By the beginning of Living Wage Week 2017, we have 31 funders signed up and committed to paying the real Living Wage through their grants with more coming on. These include several large funders such as Comic Relief and Big Lottery Fund and local authorities such as Islington and Brent. Collectively, this group of funders support over £831 million in funding annually – a significant proportion of this amount is likely to be granted to pay for salaries.

To even begin to end low-pay in the charity sector, we have not only to have commitment from charities to strive to pay workers the real Living Wage but, crucially, we have to head upstream, to the source of their funding and open real discussions with funders and commissioners about their commitment to paying people a real Living Wage through grants and contracts.

I am not suggesting that this conversation is always easy: commissioners and funders both operate within ever-tighter budgets, but that does not mean we should not have the conversation. Supporting charities through grants and contracts to do beneficial work locally whilst, at the same time harming the health of local workers by not paying them enough to live off, truly is a false economy.  It is these workers who are likely to experience shorter lives and experience more years of those shortened lives living with life-limiting disabilities.

Being a Living Wage employer is not just good for the employee’s health. It’s good for the charity’s too. A major contributor to the Low Pay in the Charity Sector report is Cardiff University’s Cardiff Business School. Their research shows that employers feel there are reputational benefits from being a Living Wage employer - that it helps with recruitment and retention, as well as broader benefits such as securing contracts. When it comes to challenges resulting from Living Wage accreditation, researchers found that most employers do not report any significant negative effects.

The Low Pay in the Charity Sector report doesn’t pretend to have all the answers. Rather it illustrates the work that needs to be done. It only has one recommendation: to bring the charity and statutory sectors together to determine what are the ways we should be tackling low pay in the charity sector and how do those actions differ if you are a BAMER worker, a woman, a part-time worker, a young person or an older worker. Our ambition is to work with all parts of the charity sector and the statutory services to produce a prioritised action plan for tackling low pay amongst charities.

This will be start of the sector righting a very large wrong. It will be the start of us doing right by our workers.

John Hume

Chair, Living Wage Friendly Funders’ Committee

Chief Executive, People’s Health Trust


To read the report, click here.

To connect with the Living Wage Foundation, click here.

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