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Charities pay well below the private-sector average but the gap is reducing

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Salaries in the charity sector are as much as 21% below the private sector nationally and up to 24% lower in London, according to research by Croner.

But the research also shows the pay gap is reducing, with the average difference across job roles and rank in 2009 standing at 10% less than in 2008.

The survey of over 300 charities and 50,000 staff also found the average executive salary for chief executives in the third sector currently stands at £70,706 - 21% less than their counterparts in the private sector.

Other directors receive an average of £61,886, which is 18% less than those in the private sector and a bigger shortfall than last year when they received 15% less. London-based charities are paying well below the London commercial sector average at director and senior executive level by 24% and 20% respectively.  

Across the different charities, those in the medical sectors are paid the most, receiving almost 6% more than the charity average, while children and family and social welfare charities pay their staff just over 1% above the average. Disability charities have the lowest pay, averaging almost 4% below the rest of the industry.

Just over a tenth (11%) of charities implemented a pay freeze in the past year, significantly more than the 4% of private-sector companies that did the same. And the average pay rise in the charity sector was 2.8%, slightly less than the 3% last year and less than companies in the commercial sector (2.9%).

Looking ahead, charities expect current economic problems to have some effect on pay rises with pay review forecasts also down 1% on last year at 2% and significantly behind the commercial sector's projected 3% rises.

Andrew Walker, head of reward at Croner, said: "Although charities have always been excellent at balancing the need for prudence with fairness in setting and managing pay, our survey shows the size of the shortfall against other sectors is slowly decreasing.

"It seems that charities are becoming much more aware of the need to attract the best talent from commercial sectors. What is worrying is the shortfall in pay for those at director and chief executive level, where the gap is particularly large and appears to be increasing. While money is often not the prime motivator for employees in the charity sector, if organisations want to recruit and retain the best leaders, then they need to find creative ways of showing that they are able to compete for talent."