Wage growth among charity workers has lagged the private sector by £8.5bn over the past 10 years, according to research by think tank PBE.
From its analysis of ONS data, PBE found that average pay has grown by over 10% in the private sector over the past decade compared to a decline of 1.2% in the not-for-profit sector.
Higher earners in the charity sector have seen their wages decline by 5% in the past decade while lower earners have been protected somewhat by minimum wage increases, PBE found.
It estimated that the 2.4 million employees of “non-profit body or mutual associations”, as defined by the ONS, would have been earning £3,500 more on average in 2025 had wage growth matched the private sector.
The cost-of-living crisis has put pressure on wages across the economy, PBE said, with employees across all sectors seeing their wages grow by 7.1% in the past decade and public sector workers only seeing a 0.9% rise on average.
However, private companies have raised prices to help fund pay increases, while charities have more limited abilities to increase their income.
PBE analysts also found that the non-profit sector workforce remains more highly qualified than the average across the rest of the UK economy.
‘Shock absorbers needed’
PBE chief executive Matt Whittaker said the figures showed that charities need to develop “shock absorbers” to navigate spikes in inflation.
“Ideas such as linking public funding to charity caseloads or temporary boosts to tax incentives such as gift aid are worth exploring, although they would need careful consideration,” he said.
“More straightforwardly, the sector could remove the ‘faff tax’ associated with direct debit giving.
“By adopting a new norm of auto-indexation of direct debits, the sector could end the situation whereby donors have to jump through administrative hoops each time they want to increase their level of giving.”
