Four out of five young social care workers benefit from the National Living Wage (NLW) despite no legal entitlement, according to think tank.
A report by the Resolution Foundation revealed 83% of social care workers under 25 have seen their hourly pay increased to or beyond £7.20 due to the NLW—despite the fact it was designed for older workers.
The NLW, which was introduced in April 2016, is the new legal minimum wage for workers aged 25 and over. Workers aged 21-24 are entitled to the Minimum Wage of £6.70 an hour, with lower rates for younger workers.
The independent think tank’s report, the first detailed assessment of the impact of the NLW on individual workers, also recorded the ‘knock-on’ benefits of the living wage across the social care sector as a whole.
During April-July 2016, the foundation reports, providers invested more than twice as much in raising pay across the workforce as a whole than if they had only satisfied NLW requirements.
This will partly be the result of standard pay uprating but, the Resolution Foundation suggested, it also signals the ‘spillover’ effects from the NLW.
The report, entitled Rising to the Challenge, found no evidence employers had cut workers’ shifts in order to fund the pay increases.
Average hours for social care workers previously paid below the NLW have risen by 1.1% since its introduction, slightly faster than the increase for higher-paid workers (0.5%).
There is, however, the risk of a ‘bunching’ of pay in social care at the legal wage floor. One third of the care workforce is now paid the top adult rate of £7.20 which could mean the chances of progressing within the sector are reduced.
The Resolution Foundation’s report also warned of the risk of non-compliance by social care providers when time not covered by contracted pay rates but legally covered by the minimum wage, such as journeys between patients, is accounted for.
The extra cost of the NLW in social care is set to reach £2.3bn by 2020. The report noted employers will struggle to continue spreading the benefits of the pay rises unless the Government ensures more funds will be available to pay for them.
The social care precept - a 2% rise on council tax - will not be enough to pay for the increased cost of the NLW, the report warns.
A similar conclusion was reached by the the Association of Directors of Adult Social Services (ADASS) last month. In their annual budget survey, ADASS found increasing council tax by 2% to plug adult care costs would barely generate two-thirds of the £600m needed to cover the wage rise.
Laura Gardiner, 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,’ Ms Gardiner warned.
‘Our ageing population combined with the prospects of reduced inward migration post-Brexit make it essential that more public funding is available for care providers to attract and retain the care workforce we need.’