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By Debbie le Quesne

The living wage: Concept of fairness – at a price

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Found an interesting piece online with the Guardian Social Care Network all about the thorny subject of pay – the living wage to be precise.

The article notes “care work has become synonymous with poor pay, zero-hours contracts and long hours. “

But it adds there is a split in the sector in its response to pay.

Let me quote: “This surprising split within the care sector has seen 20 homecare providers out of about 5,000 become accredited living wage employers, paying the living wage of £7.85 an hour or the London living wage of £9.15 an hour, whereas there are only four care home providers out of over 8,000 in the UK similarly accredited.”

The article informs that an estimated 1,200 homecare workers are paid the living wage, while the number of care home staff receiving it is thought to be around 700.

The article rightly observes that “part of the reason some homecare providers are more willing to pay the living wage seems to be pressure from local authorities, such as Islington and Southwark, that are committed to being living wage employers.”

It’s an enlightened approach, but one that by economic definition is going to be regional. The South has more than here in the West Midlands. More wealth, more private clients, more better paid jobs . . . generally more of all the wealth generators.

According to the article, Michael Vaughan, owner and manager of Red Rocks care home on Wirral, which pays the living wage, believes councils are too scared to pressure care home providers as then they will have to pay a higher fee to those homes.

Indeed!

He claims to have seen pressure placed on homecare providers by councils to pay the living wage, but not on care home providers.

He is quoted as saying: “I think the local authorities have a major part to play in this. The large majority of care homes up and down the country rely on socially-funded clients and the wages of the staff take up half of the fee for each resident. I know care homes that receive social services funding and they would love to be able to pay the living wage.”

That’s very true. Many of the West Midlands Care Association providers have a genuine desire to reward better their staff, but the local authority fees will not sustain such a privilege.

He also thinks homecare agencies have been more forthcoming in paying the living wage because they have fewer overheads than care home providers.

Mr Vaughan has been paying the living wage to his staff for well over a decade and admits he can only do this because the large majority of residents in Red Rocks are privately funded.

As I’ve mentioned in a recent blog, charging the right fee is crucial, but the pain of reality is readily captured in comments from Ian Smith, chairman of Four Seasons, the largest care home provider in the UK.

According to the Guardian he believes it is just not financially viable for most care homes to pay care workers the living wage, and thinks it would result in closures.

I agree.

He says: “The living wage is a concept of fairness that few would argue with, but it has to be affordable and right now for many employers that just isn’t the case. Due to financial constraints in the aftermath of the international financial crisis, the fees local authorities pay for care home places have reduced by 5 per cent in real terms over three years while non-discretionary costs of wages, energy, food have risen.”

With payrolls the biggest single cost item for operators, minimum wage increases alone are challenging. Add on top of that living wage margins and there is scope for real trouble.

The debate will doubtless rumble on and I have no magic wand. Sorry.

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