Spotlight on charity sector: more than a quarter of employees paid below real living wage

New report explores low pay in the charity sector as charities, funders and commissioners call for a real Living Wage.

A new report from the Living Wage Foundation finds that 26% of charity workers earn less than the Living Wage, a voluntary rate that is set to account for the cost of living in the UK and London respectively. This is higher than the UK average, which stands at a fifth (21%) of the overall national workforce.

The report, compiled by the Living Wage Foundation and released as part of Living Wage Week (5 - 11 November 2017), looks at the proportion of workers across the charity sector who are not paid the real Living Wage –– further broken down by gender, ethnicity, age, full or part-time hours, size of charity, sector and region.

Whilst over 800 charities – such as Macmillan Cancer Support, Dementia UK, Carers UK and Crisis – are already leading the way as accredited Living Wage Employers, the report launch has been accompanied by calls for more funders and commissioners to enable the real Living Wage, by becoming Living Wage Friendly Funders. There are now 31 Living Wage Friendly Funders promoting Living Wage through their grant-making, including People’s Health Trust, Trust for London, Barrow Cadbury, the Joseph Rowntree Foundation, Comic Relief, the London Borough of Islington, the Big Lottery Fund, City Bridge Trust and Lloyds Bank Foundation.

Living Wage accredited charities ensure that all staff, regardless of whether they are direct employees or third-party contracted staff, receive a minimum hourly wage of £8.45 in the UK or £9.75 in London (rates to be updated on Monday 6^th November). Both of these rates are significantly higher than the statutory minimum for over 25s of £7.50 per hour introduced in April 2017. This means that those earning less than the real Living Wage could be earning at least £1,852.50 less per year than their accredited Living Wage employer worker counterparts in the UK and £4,887.50 less annually for those in London*.

Low pay in the charity sector

The report reveals the following trends:

• Proportionally a third of women (30.4%) in the charity sector earn less than the real Living Wage compared to just a fifth (21%) of men. This is higher than the UK average across sectors (27% women in low paid work) despite women making up the majority (65%) of the workforce in the sector. Overall, almost three quarters (73%) of low-paid charity sector workers are women.
• People from BAME backgrounds are particularly affected by low pay, with very high numbers of (62%) ‘Other Asian Background’ and (30%) Black/African/Caribbean/Black British respondents, reporting that they earn below the Living Wage. Overall a lower percentage (8%) of low paid workers in the charity sector are from BAME backgrounds, compared to the wider workforce (12%), but this may stem from under-representation.
• Charity workers below the age of 25 are much more likely to experience low pay, with more than half (52.4%) of those between 20 and 24 earning below the real Living Wage, although this does compare favourably with the workforce as a whole (58.4%).
• Part-time workers are 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.
• Smaller charities are more likely to pay below the Living Wage, with majority of low paid employees (77.2%) working for charities with less than 50 employees; higher than in the wider economy (62.3%).

Moving forwards

Katherine Chapman, Director of the Living Wage Foundation, said:

“This report shows that low pay remains a real challenge across the charity sector, with stark revelations as to demographics of those most likely to be worst affected. A collaborative approach from thousands of charities and funders is needed, to ensure that those working for charities can earn a wage that meets the cost of living. The good news is that over 800 charities have already signed up as Living Wage Employers and we look forward to working with funders, commissioners and charity employers to highlight the benefits of investing in responsible wages; such as increased morale, motivation, staff retention and reduced absenteeism.”

John Hume, Chief Executive of People’s Health Trust, said:

“To even contemplate ending low pay in the charity sector, not only do we need charities to work towards paying their staff a real Living Wage, but we need funders and commissioners to commit to paying the real Living Wage through grants and contracts they award to charities. It is not always an easy conversation to have. With an increasingly uncertain economic climate, we know many are operating with ever-tighter budgets, but we still need to act. We need to work together, and do right by our workers, ensuring all charities reliant on their grants are able to pay the real Living Wage.”

Sir Stuart Etherington, Chief Executive of NCVO, said:

“There is a clear moral, economic and business case for increasing the wages of the lowest paid. Today’s report reminds us that investing in people not only improves their own wellbeing but can also improve organisations’ ability to attract, motivate and retain great staff. I know times are tough for many charities, but we are making good progress, with over eight hundred accredited Living Wage employers in our sector. Wherever possible, I would encourage charities to consider becoming Living Wage Employers. One of the drivers of low pay in the voluntary sector is the terms and fees for public service contracts. NCVO has called for contracts that enable providers to pay their staff the Living Wage.”

ENDS

For more information, contact Katy Davies on katy.davies@livingwage.org.uk or call 07535 135 663.

Notes to editors

* (based on 2016/17 Living Wage rates and assuming full time work). This increases further for those aged 18-24 who do not qualify for the Government’s national living wage. Hundreds of charities have signed up to the Living Wage accreditation, predominantly in charities occupied with health and social work activities (36.5%) and education (16.7%).

A closer look: low pay by sector of charity work

Charity workers currently on low pay typically work in the following sectors:

Residential care, education and membership are key sectors to focus on to ensure that charity workers can earn a real Living Wage.

Low pay by occupational level

Types of occupational levels with the highest rate of low pay include ‘routine occupations’ such as cleaners (69.1% of workers are below Living Wage) and ‘semi-routine occupations’ such as receptionists and care workers (56.5% are below Living Wage).

About the report

The Low Pay in the Charity Sector report is a result of data compiled by National Council for Voluntary Organisations (NCVO) and is taken from the Labour Force Survey conducted by the ONS, where survey respondents self-identify as working or a ‘charity, voluntary organisation or trust’. The data is based on a sample size of approximately 40,000 responding UK households.

The data on low pay has been analysed by the National Council for Voluntary Organisations and is taken from the Labour Force Survey (LFS) conducted by the Office for National Statistics, where survey respondents self-identify as working for a ‘charity, voluntary organisation or trust’ as their main job or place of work. Figures are based on the 30% of LFS respondents who answered survey questions on their pay. Accordingly, they should be treated with some caution, and are only indicative of wage patterns that may exist in the wider workforce. The LFS is the best available data source on pay in the charity sector.

To view the full report, click here.

Additional stats

Low pay by nation/region

By region, the areas where charity staff are most commonly being paid below the real Living Wage are:

1. East Midlands (40.6%)
2. North East (34.8%)
3. Wales (33%)
4. Yorkshire and Humberside (32.8%)
5. South West (32.6%)

Case studies – further quotes/information available on request

Kaya Comer-Schwartz, Executive Member for Community Development at Islington Council

“Islington Council has a long-standing tradition of striving to create a more equal borough for everyone, which is why we are so proud to be a Living Wage Friendly Funder.”

“In my role, I have the honour seeing first-hand the effort the voluntary and Charitable sector put into helping others and fostering relations within the community. If the charity sector is to be sustainable and continue to retain and recruit excellent employees in future, it must pay no less than the Living Wage.

“Charity sector workers do vital work every day and are an example to us all. It is only right that they are remunerated with the Living Wage for what they do.”

Eric’s story – Low-paid worker

“I’ve lived in Birmingham for four years. I’m a support worker, working with adults with learning disabilities and mental health disorders. I’ve always worked in social care and I’m skilled at this work. But I get paid just £7.20 [the 2016 legal minimum] an hour. A lot of my colleagues are in debt and we can’t save at all, either for the future, or for emergencies. The job is very demanding, and having extra money to spare helps you to afford to de-stress and have space in your head.

Not everybody can do this job. Of course there’s training, but that’s not enough. You also need the right mindset of common sense and resilience. It’s difficult to see how that is only valued at £7.20. Some people I work with have looked for jobs in a supermarket that paid more for less hassle.

The Living Wage would make it easier to attract and keep the best and most suitable workers to this role. We offer quality support to the most vulnerable members of our society.”

Dionne’s story - Living Wage worker

Dionne is a Corporate Personal Assistant and Administrative Assistant at Who Cares? Scotland – a Living Wage employer. Prior to this role, Dionne worked on the minimum wage and was unable to take her children out for day trips. She was forced to quit that job because of the imbalance between her salary and the cost of child care. Now they enjoy family days out and she can afford to send her children on school trips. This in turn has had a positive impact at work: ‘It makes you want to work harder…you feel a wee bit more appreciated about your work, you’re confident and proud’.

Spare Tyre – Living Wage Employer

Spare Tyre is a leading participatory arts charity based in London, that produces bold and powerful theatre with voiceless communities and individuals - sharing and celebrating untold stories, transforming lives and challenging prejudice.

Spare Tyre sees the value of volunteering but emphasises that a clear distinction must be in place between volunteering (or taking a placement as part of your studies) and employment. They were therefore delighted to become an accredited Living Wage employer, thanks to the support of the Walcot Foundation and the Berkeley Foundation.

Spare Tyre’s commitment to securing the London Living Wage for employees has encouraged genuine change in theatre:

“One of our mantras is ‘train, mentor, progress’. Offering entry into the arts at a Living Wage is crucial if we are going to make a genuine shift to a diverse and thriving workforce. True diversity in the arts will not happen without a commitment to paying staff at a liveable rate, particularly in London.”

About the Living Wage Foundation

The Living Wage Foundation is the organisation at the heart of the independent movement of businesses, organisations and people who believe that a fair day’s work deserves a fair day’s pay. We recognise and celebrate the leadership shown by the nearly 3,500 Living Wage employers across the UK who voluntarily commit to ensure their staff earn a real Living Wage that meets the cost of living.

We are an initiative of Citizens UK. Only the real Living Wage is calculated according to the basic cost of living in London and the UK.

Employers choose to pay this wage on a voluntary basis. The real Living Wage applies to all workers over 18 – in recognition that young people face the same living costs as everyone else. It enjoys cross party support.

The 2016/17 London Living Wage is currently £9.75 per hour. This figure covers all boroughs in Greater London. The 2016/17 UK Living Wage for outside of London is currently £8.45 per hour. These figures are calculated annually by the Resolution Foundation and overseen by the Living Wage Commission, based on the best available evidence on living standards in London and the UK. The 2017/18 Living Wage rates are announced on Monday 6^th November 2017.

About People’s Health Trust

People’s Health Trust is one of the founders of the Friendly Funders scheme and first piloted paying the real Living Wage to grant-funded posts in 2013. They wanted posts they funded to be paid the real Living Wage in order to support higher standards of living for charity sector employees and their families. Since becoming a Friendly Funder, People’s Health Trust have noted a number of benefits including the impact on individuals’ lives. They have also noticed the beginnings of a shift in culture, as the scheme has encouraged smaller organisations that they fund to feel more confident about requesting Living Wage funding from other funders.