01/09/2016
Over 80% of workers who had previously been paid below the National Living Wage of £7.20 which was introduced in April are now enjoying pay above the amount, despite the fact that it has not been legally enforced, according to an independent think-tank called ‘resolution foundation’.
The report speaks glowingly of how the health sector has stepped up to meet government pay guidelines. It is also understood that despite the government’s desire to implement the wage to over 24’s, it has been mostly paid across the board in the health care industry.
When pay improvements during April-July 2016 are considered across the workforce as a whole providers invested more than double raising pay than if they had only implemented NLW requirements alone. Despite some of this being due to normal pay upgrading, it nevertheless shows the effects from the NLW that the Resolution Foundation and the Office for Budget Responsibility had claimed would occur.
There is no evidence to suggest that workers’ hours have been cut to help fund the pay increase, with evidence suggesting a slight raise in hours worked by employees.
The news will come as welcome to downtrodden workers who felt their skills and commitment was undervalued and that a pay-rise has been long overdue.
With the extra cost of the NLW in social care set to reach £2.3 billion by 2020, the ability of the sector to continue to spread the benefits in the way it has so far will be strained to the limit, even if accounting for new Council Tax-raising powers (known as the social care precept). The fact that the resolution foundation found evidence of ‘bunching’ pay to meet the £7.20 requirement suggests a lack of opportunity and mobility within the sector for those who want to study and enter management roles.
The think-tank has called on the government to ensure that there are enough funds for providers to continue to pay the NLW without negative consequences for workers and to recruit and retain the staff needed to meet the demands of an ageing population; as well as to allow for opportunities to get a promotion.
Laura Gardiner, the Senior Research and Policy Analyst at the Resolution Foundation, said:
“It is great news that the National Living Wage has had a large positive impact on pay in social care, giving hundreds of thousands of frontline care workers a pay rise, with no evidence of hours being cut to foot the bill.
“It is encouraging that younger workers have also benefited from the new 25-and-over rate, despite having no legal entitlement to the National Living Wage. In fact, across the age range social care employers are clearly doing much more than the bare minimum where pay is concerned, with the average pay rise double what it would have been had bosses just increased pay to the legal wage floor.
“As the NLW continues to rise to its target value by 2020 we risk reaching a ‘crunch point’ where a lack of funding leaves the care sector unable to continue to spread the benefits of the NLW. Our ageing population, combined with the prospects of reduced inward migration post-Brexit makes it essential that more public funding is available for care providers to attract and retain the care workforce we need.”
