Charity Staff on the Breadline: Non-Profit Employees Facing Real Terms Pay Cuts

Analysis for Byline Times reveals charity sector employees are themselves being pushed into poverty pay, Nic Murray reports. But staff are fighting back

Thousands of charity sector employees, working at some of Britain’s largest charities, providing frontline support during the cost of living crisis, have themselves faced an average real terms pay cut of over 5% for the last financial year, Byline Times can reveal. 

The Charity Finance 100 Index compiled by Civil Society Media, lists Britain’s largest charities based on average income over the previous three years, about a third of whom provide support and deliver services to households across the UK. An investigation of these charities based on analysis of annual reports and requests for information, found 23 handed their staff an average pay increase of 4.6% for the last financial year. 

The consumer price index (CPI) rose by 10.1% in the 12 months to March 2023, meaning all these pay increases failed to ensure wages kept up with inflation. 

Marie Curie, a charity that provides support and services for people living with a terminal illness, came closest to protecting the real value of their wages, giving a pay increase of 8% to all staff apart from those in clinical settings, whose pay is aligned to the NHS. Mencap, the learning disability charity, gave all staff a 2% increase with a further 2% to come in October this year, although its support workers received a 13.6% increase last year. 

Many charities have struggled over the past year, facing rising business costs alongside significant increases in demand as the cost of living crisis. The charities investigated are no different in this regard, but benefit from significantly better financial security, in the form of often substantial reserves. Of the 22 charities that published their minimum reserves target, their actual level of reserves was an average of 61% above the target.

Cash Stockpiles

For eight charities whose reserves were above even their stated maximum reserves target, the average pay increase was only 3.7%. Among these was the British Heart Foundation, which gave all staff a pay rise of 4-6% and a subsequent cost of living support payment of £500, while the charity’s reserves stood at £93 million over their stated maximum target.

Several of the charities provided additional financial support in the form of one-off cost-of-living payments to staff, some of which were weighted to best support those on lower wage bands. 

Ultimately, however, ad-hoc payments act as a short-term solution to rising costs and fail to fully address the long-standing issue of low pay across the sector. “Low pay is a really serious issue, a lot of our members who are doing frontline work, whether that's at big charities, small charities, everyone is struggling with having not enough money to live on,” says Alexa Waud, Vice Chair of the Independent Workers of Great Britain Charity Workers Branch of the scale of low pay for charity staff. 

Like the UK economy as a whole, pay across the charity sector has fallen since 2008. But average earnings among charity sector staff were already lower than both public and private sectors by the financial crisis and remain the lowest still. 

Average weekly earnings in the charity sector are £506. That is £12 below the average private sector and £89 below the average public sector wage. This means that average real pay is now £22 a week lower in the charity sector than in 2008, with this decline leading to pay that now stands at a similar level to where it was in 2002.

In a recent report, Pro-Bono Economics estimated the hourly pay gap between the charity sector and the rest of the economy at 9%. The gap, they argue, narrows the pool willing to work in the sector and disadvantages those from marginalised backgrounds who choose to do so

This gap is often justified due to the purpose and value-driven nature of the sector, but Waud is clear that this is something IWGB and its members aim to tackle in their work. "It's definitely the case that charities frame the work that people are doing as…‘you're doing this work because you care about an issue’ - and this is the goodwill that they're exploiting. Which is why coming together and challenging this is really important."

Pushing Back

After decades of wage stagnation, followed by a cost-of-living crisis, the last year has seen waves of industrial action across private and public sectors in disputes about pay, with the number of days lost to strike action in 2022 the highest since 1989. 

Though not as widespread, included in that total were some charity staff such as over 600 at Shelter who during a December strike called on management to “Cut Shelter reserves not wages,” which were £8.15 million above their minimum target by March 2022. 

This summer may see more charity staff take action in response to low pay, as staff at another large homeless charity, St. Mungo’s are set to go on strike for four weeks from May 30 following an ongoing dispute on pay. Staff had a 1.75% pay increase imposed on them last year before voting to reject the offer of a 2.5% increase for 2023/24 this week. 

“You can’t pour from an empty cup, and it’s getting to the stage where we can’t look after our clients the way we should...Low pay isn’t just a problem in practical terms, though we are all struggling with skyrocketing rents and energy bills – it’s also pushing up our workloads up as people go off sick with the stress of it,” says a St. Mungo’s employee who voted to reject the pay offer. 

Strikes such as these and the growing unionisation of a sector through the efforts of Unite at both Shelther and St. Mungo’s and the IWGB charity workers branch are showing that collective action is becoming an increasing feature of the charity sector, addressing some of its most entrenched issues. 

"Charity work is often undervalued, in particular, frontline work hasn't been valued enough in terms of pay and clout in society,” says Waud, “and workers in our branch aren't going to stand for that anymore."

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