Third sector organisations fail to pay living wage

Many charities and other third sector institutions are not paying all of their workers above the Living Wage, despite some being set up to help those most in need.

Low pay in the third sector has not improved in five years with a fifth (17%) of workers still earning below the living wage.

Low-paid third sector workers are also more likely to have lost work during the pandemic, with nearly half (48%) being away from work, mainly due to furlough, during the height of the pandemic.

This is compared with just 20% of those earning at or above the living wage, according to research from the Living Wage Foundation (LWF). 

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Speaking to HR magazine, Helen Giles, HR director of Revitalise Respite Holidays, said the research was symptomatic of the struggle many charities face.

She said: “I don’t believe there are any charities who wouldn’t wish to pay their staff at least the living wage if they could. Unfortunately many of them, especially small and medium sized, struggle to make their limited sources of funding stretch to the things they would like to do when they can barely afford the things they have to do.

“For example, all the costs of ensuring they comply with regulations are huge and ever-increasing.”

She recommended that HR staff should examine payroll data to determine whether or not their organisation, intentionally or not, was paying a living wage.

Giles added: “The role of HR is to ensure that paying decent wages to their lowest paid workers and prioritising increases to this group, when there is any actual or forecast sustainable upturn in income, is very much on the radar of senior management and boards.”

There was also a pay gap between employees from minority ethnic backgrounds earning below the living wage (20%) and their white counterparts (17%).

LWF’s research found many third sector workers on low incomes were from groups typically squeezed out of the workforce.

A fifth of women (19%) were paid below the living wage compared with 13% of men, while 20% of disabled workers earn below the living wage vs 15% of those without a disability.

The greatest disparity was between the 20% of part-time workers not earning the living wage, compared with 9% of full-time workers.

Perry Timms, founder of HR consultancy PTHR, encouraged HR in the third sector to take a stand against low wages.

Speaking to HR magazine, Timms said: “Salaried staff paid below a living wage is an own goal in terms of reputation and fairness. Whether by design or incidental circumstance, morally, this is not good to read.

“I'd like to see third sector HR professionals push their organisations to pledge to the Living Wage Foundation's standard criteria and quality mark showing a commitment to being fairer to all the people who care deeply about the work they do for others and the environment.”

The real living wage is calculated at £9.50 per hour outside of London and £10.85 within London.

Dora-Olivia Vicol, co-founder and director of Work Rights Centre, said the work of charities is often taken for granted, including wages. 

She said: "The prevalence of low wages in the sector also speaks to the fact that, as a society, we don't value care and social reproduction as much as we should. Charities play a key role in supporting the vulnerable, but at times we take that work for granted.

"HR professionals in the third sector have an important role to play in advocating for decent wages, and stressing the benefits of motivated employees. There is no doubt about the fact that teams that feel valued perform better, are likely to stay longer, grow into an organisation, and create a culture of excellence. Decent pay is an important part of feeling valued - along with opportunities for training, personal development, and good management."

The LWF research is based on quarterly Labour Force Surveys and the Annual Survey of Hours and Earnings. 

Third sectors workers are classed as employees within charities, universities, community interest companies, social enterprises and pressure groups.