In-work poverty in the third sector

This guest blog for Living Wage Week 2021 is by Alice Ollendorff, Programme Officer at the Living Wage Foundation. In this blog, Alice details how 17% of all third sector workers earn less than the real Living Wage and how ensuring workers receive a wage that meets the cost of living is arguably more important than ever.

The real Living Wage rates are the only UK wage rates that are based on the actual cost of living and over 9,000 organisations have signed up to paying these rates. The rates are independently calculated every year by the Resolution Foundation, and they are based on what employees and their families need to get by. This Living Wage Week, we are celebrating 20 years of the Living Wage movement, as the concept of the Living Wage in the UK was first thought up 20 years ago during a Citizens UK meeting in East London.

The new Living Wage rates are announced every November during Living Wage Week, and this year’s rates are £9.90 / hour in the UK and £11.05 / hour in London, and organisations already accredited with us must implement these new rates for all of their employees as soon as possible, within six months. There are over 2,500 accredited third sector organisations in our network, meaning that at least 185,000 employees in the third sector are being paid the Living Wage or above. While this is something worth celebrating, more needs to be done to ensure that everyone working in the sector is paid the Living Wage, especially considering that the sector is designed to support communities facing barriers in their own lives, often stemming from poverty.

Low pay in the third sector

In September, the Living Wage Foundation published a Low Pay in the third sector briefing paper, which highlighted that around 17% of all third sector workers earn less than the Living Wage, a figure which remains unchanged from 2015. It is alarming that in the past six years, there has been no improvement in the pay of the lowest paid workers in the third sector. This demonstrates that more must be done to raise awareness of the importance of paying the Living Wage to those who are working hard to help others.

Over the past year, many third sector organisations have spoken publicly about their commitment to being inclusive and representative workplaces. This is a step in the right direction, but these commitments must now materialise into more concrete, long-term actions. When you take a more in-depth look at the data from the briefing paper, low pay becomes even more widespread for certain groups of people. Almost 29% of part-time third sector workers earn below the Living Wage, compared to 9% of those in full time roles, and 19% of women are paid below the Living Wage, compared to 13% of men. Paying all workers the Living Wage will help to address the gender pay gap that exists in the UK, especially given that women are over-represented in part-time roles in the third sector.

The paper also highlighted that low pay in the sector is even more prevalent for those from racialised groups and for workers who are disabled. 20% of workers from racialised groups are paid below the Living Wage, compared to 17% of White workers, and 20% of workers with a disability earn below the Living Wage, compared to 15% of those without a disability. These figures highlight the significant work that urgently needs to be done to eradicate the racial and disability pay disparities that are present in the UK. Belonging to more than one of these groups compounds the risk of in-work poverty. Paying all employees the Living Wage is a simple step organisations can take to address multiple forms of disadvantage around pay.

A wage workers can live off

Ensuring workers receive a wage they can live off, sets a precedent that organisations care about doing right by their employees, and in turn, means that workers can afford to pay the unexpected costs that sometimes crop up in everyday life, such as an emergency trip to the dentist or a broken boiler.

There could be several different barriers or considerations that third sector organisations face that prevent them from paying the Living Wage. For example, financial restraints or held assumptions that work designed around helping others should be low paid, if paid at all. Next spring, we will be publishing a research report which will examine the most pervasive factors preventing those in the sector from paying the Living Wage.

Over the past 18 months, Covid-19, along with other political and economic events, has highlighted that many people in the UK do not earn a wage they can live off, and the consequences of this have been huge. However, in-work poverty is not something that has just emerged since the start of the pandemic, as research published prior to the outbreak of Covid-19 showed that around 56% of people in poverty are in a working family, a figure which has increased by 20% in just 20 years. This illustrates the extent to which increasing living costs are not being mirrored by increasing wages.

Research published since the start of the pandemic paints an even bleaker picture. Last month, the Joseph Rowntree Foundation published research which found that 33% of low-income households in the UK were in arrears because they were behind on rent or mortgage payments, council tax, utility bills or personal debt repayments. Low pay however is not the only issue at play here, as zero-hour contracts are also contributing to rising levels of in-work poverty. Research published by the Living Wage Foundation in September found that 21% of workers in the UK experience work insecurity. Therefore, in order to address the issue of in-work poverty, employers need to pay their workers the Living Wage, whilst also providing them with the security of hours.

To support the Living Wage Foundation with addressing the issue of low pay in the third sector, the foundation established a Third Sector Steering Committee earlier this year, which aims to bring about wider workplace change around pay and working conditions in the sector. The committee is made up of a combination of Living Wage Employers of different sizes and structures, as well as individuals reflecting the voices of those most affected by low pay and insecure work. The foundation’s Third Sector Steering Committee also helps to promote the foundation’s Living Wage Funders Scheme, a growing movement of 57 funders, all of whom are committed to tackling low pay in the third sector through their grant-making. Whether it’s funders funding posts at the Living Wage, or employers paying their employees the Living Wage, ensuring workers receive a wage that meets the cost of living is arguably more important than ever.

Covid-19 has highlighted the extent to which we rely on third sector organisations to support society’s most marginalised people. As charities and other non-profits continue to play a pivotal role in aiding the UK to recovery, it is vital that workers in the sector are paid a wage that they can afford to live off. The fact that 17% of all third sector workers earn less than the Living Wage should be enough to encourage employers to re-evaluate the pay of their lowest paid workers. When considering that this percentage is even higher for women, racialised groups and people with disabilities, the urgency with which the issue needs to be addressed becomes even more pressing. While we should all take some time to reflect on these stark statistics, reflection is not enough, employers and funders need to take action and ensure that all workers are paid a wage rate that reflects the actual cost of living. To find out more about becoming an accredited Living Wage and Living Hours Employer, please visit our website.