Charities and the living wage: Affordability is the main barrier

05 Nov 2014 In-depth

The salaries of charity chief executives have been under increasing scrutiny over the past year, but what about those at the other end of the pay scale? For Living Wage Week Kirsty Weakley reports on where charities stand when it comes to the living wage.

The salaries of charity chief executives have been under increasing scrutiny over the past year, but what about those at the other end of the pay scale? For Living Wage Week Kirsty Weakley reports on where charities stand when it comes to the living wage.

A quarter of organisations in the Charity 100 Index pay all of their staff the living wage, while those that don’t blame government contracts for preventing them from being able to pay higher salaries.

Civil Society News contacted all the charities in the index, which is based on a three-year average of their total income, to find out which pay their staff the living wage, currently £8.80 in London and £7.65 outside of London.

Some 22 charities responded to say that they already pay staff at least the living wage rate while three more are working towards it.

Three charities admitted to not being able to pay staff the living wage and the rest were unable to comment or chose not to respond.

Of those Charity 100 Index chairties that pay the living wage, nine are accredited with the Living Wage Foundation and five are working towards or considering applying for accreditation.  One charity said that it paid above the living wage rate without having a set policy to do so.

The number of organisations that have been accredited by the Living Wage Foundation has now reached 1,000, with voluntary organisations making up 208 of these.  

‘It’s the right thing to do’

The most common reason cited by Charity 100 Index charities for becoming a living wage employer is that it is the right or fair thing to do, particularly for anti-poverty charities who said it would be hypocritical to campaign against poverty for others and not pay their own staff the living wage.

International aid charities including Save the Children, Christian Aid, Tearfund, ActionAid and Plan International UK all said that they pay the living wage.

Comic Relief announced this week that it had become an accredited living wage employer.

Kevin Cahill, chief executive at Comic Relief, said: “It's only right that our practice and policies as an employer reflect our values, goals and ambitions as a charity. We're passionate about creating a great workplace, where staff receive a fair salary for the truly hard work and commitment they demonstrate daily.”

 What is the Living Wage?

 

More than 1,000 organisation have been accredited since Citizens UK started the scheme in 2001, with half of those signing up in the past year. Just under 20 FTSE 100 companies have been accredited as living wage employers.

Citizens UK organises Living Wage Week in November to raise awarenes of low pay and celebrate employers who have signed up.

The rate is calculated by the Centre for Research in Social Policy at Loughborough University and the London rate by the Greater London Authority. It is based on a combination of basic living costs and income distribution.

This week the Living Wage Foundation announced that the UK rate from 2015 would increase to £7.85, while the London rate would go up to £9.15.

The national minimum wage is £6.50 per hour.


ActionAid has been actively supporting the Living Wage Foundation’s campaign from the beginning and was one of the first organisations to be accredited. It has also been shortlisted for the Living Wage Champions Award for 2014. In conjunction with Plan UK and Christian Aid it launched an apprenticeship scheme to help young people enter the international development sector, which pays apprentices the living wage rate.   

Graham Salisbury, head of human resources at ActionAid, said that paying the living wage is “in alignment with our values, and it would be wrong for us to be addressing issues of poverty overseas while ignoring it here in the UK”.

Daniel Jones, head of business development at Stewardship, said that the move to pay the living wage was “for us, a values-driven decision”.

“We can't inspire others to greater generosity or excellence if we don't practice what we preach,” he said. He added that being generous on salaries and maintaining a high retention rate means the charity spends very little on recruitment.

United Learning has just agreed a deal to pay its staff the living wage rate from September 2015.

Mandy Coalter, director of people at United Learning, said: “There were all sorts of good business reasons for us to want to pay the living wage.”

“We do recognise that all the staff that work in our schools are crucial to delivering quality education so we need motivated quality staff who feel they are paid a fair rate for the job,” she added.  

‘It’s not that we don’t want to’

Organisations that rely on government or local authority contracts or funding told Civil Society News that this made it impossible to pay staff above the living wage rate, even when they wanted to.

Simon Morris, chief executive of Jewish Care, told Civil Society News that the charity benchmarks salaries against similar organisations and is committed to paying at least the average wage for the sector, but that government funding for social care was not enough to enable them to pay the living wage.

He said: “Our aspiration would be that we are able to pay the living wage, I think the principle and the concept is absolutely right.

“The issue is that social care is underfunded by the state to the extent that while I think that it is an aspiration that most people in social care would have, the reality of being able to deliver it is not possible because of the amount of money that we get paid by local authorities.”

Morris added: “It suits both central and local government to blame each other and my argument would be that central government should ringfence money.”

United Response also said that social care funding did not enable the charity to pay the living wage. A spokesman said: “We are funded almost entirely by contracts and the amount we are able to pay in each location is determined by the funding we receive. We would love to be able to pay the living wage and in many cases we already do so.”

MHA said that just under half of its staff are paid the living wage rate and that it is currently investigating the possibility of paying the living wage to all staff.

The Natural History Museum said that all its staff outside of London were paid above the living wage and that only one role in London was paid below the London rate.

Chris Hills, head of human resources, said: “As a body funded by central government, we operate within restrictive criteria that have been exercised by HM Treasury for several years on our ability to increase our total pay bill. This has made it harder for us to adopt the London living wage proposition.”

Not a question of willingness but ability

While it’s clear that for charities campaigning against poverty the decision to pay the living wage can seem like a no-brainer, for organisations competing with the private sector for contracts, paying the living wage appears to be a luxury most are unable to afford.

But with the gap between wages and the cost of living increasing the issue of low pay is likely to become more of an issue. Charities cannot expect to be exempted from scrutiny and need to know not just what their top staff are earning, but what their lowest paid staff are too, and be able to explain why.

 

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