How the National Living Wage Will Impact Social Care Employers?

Feb 29, 2016

In April 2016 the National Living Wage (NLW) will increase the minimum pay for staff over 25 years of age from £6.50 to £7.20 per hour. As a result many social care workers paid at the National Minimum Wage (NMW) rate will benefit from a 10.7% pay rise.

Pivotal HR surveyed social care employers in October 2015 to find out how they will respond to these changes. Survey respondents were mainly smaller private sector providers of residential care and 80% were drawn from the private sector and had a workforce of between one and 99 people (88%).

86% of Respondents Will Have to Increase Pay

86% of respondents will have to increase their pay rates and the mean reported pay increase required to meet NLW is £0.44p per hour. When front line workers are awarded this pay increase the impact on salary costs may well be amplified as there will be pressure on employers to maintain pay differentials.

Lack of Resources to Support Smaller Providers to Implement NLW

94% of respondents had not been advised by funders or commissioners if their fees will be increased to fund this increase.

65% agreed that if no increase in funding is forthcoming then it is entirely possible that they will have to withdraw from contracts.

72.5% of respondents did not know who to ask for advice on funding the NLW.

Based on our survey and messages from central and local government it is unlikely any significant additional funding is going to be made available for social care providers to fund this increase, so social care providers are going to have to fund the NLW increase themselves. Our respondents will do this by:

NLW Impact on Recruitment

66% of our respondents said the National Living Wage will affect recruitment plans. 51% stated they will target applicants under 25 years of age as the current National Minimum Wage will continue to apply to this group of workers.

33% will be freezing recruitment plans

57% agreed or strongly agreed that the NLW will make it harder for social care employers to attract and retain a competent and motivated workforce.

Our social care respondents’ strategy of targeting workers under 25 years of age is different in comparison to surveys covering other occupational groups. If our findings are replicated in changes to recruitment practices there will be a shift in the make-up of the social care workforce as employers seek to attract workers under 25 years of age.

NLW Will Impact on Training & Development Opportunities

43% of respondents believed the introduction of the NLW will affect their future ability to meet statutory and regulatory training requirements.

62.5% agreed or strongly agreed that the NLW will result in less training and development opportunities for people who work in social care.

62.5% agreed or strongly agreed that the NLW will result in fewer promotion opportunities for people who work in social care.

Social care by its nature has to be a very regulated environment and there are significant mandatory training needs and it is already a challenge for smaller providers to ensure regulatory compliance without the additional costs of the NLW.

Employers requiring advice with implementing the National Living Wage can contact Pivotal HR by e-mail hrtosocialcare@pivotalhr.co.uk, calling 020 7274 2277 or visiting www.pivotalhr.co.uk.

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