The 2024 Labour manifesto promised ‘deep reform’ for social care. Now elected with a landslide majority, the government has a clear mandate for action on the huge challenges facing the sector. However, recent announcements to scrap plans to cap care costs for individuals and the dissolution of the Adult Social Care Training and Development Fund signal a worrying direction of travel.
One source of hope is that Labour has pledged a ‘fair pay agreement’ for care workers. This is likely to be brought into law through the Employment Rights Bill announced in the King’s Speech. Low pay has been identified as a significant driver of recruitment and retention challenges for care workers. Fixing it is important, but it remains unclear what policy approach would be used to achieve pay reform. Our recent report takes a detailed look at five options that the government could use to improve care worker pay.
This shorter piece looks specifically at lessons from international approaches to reforming pay for care workers. The interactive tool below summarises approaches taken to care worker pay in Wales, Scotland, France, New Zealand and Australia. England is lagging behind, but the new government intends to work at pace to design its new fair pay agreements. Whichever option, or combination of policy options, is chosen, we believe the following principles should be front-of-mind for those designing, negotiating and enacting pay reform.
1. Root the policy in a positive case for change
While people have different ideas about what exactly a ‘good’ pay deal for care workers would look like, all five countries we studied made a strong moral case for change to the public, albeit with differences in framing. Australia and New Zealand’s union-driven reforms focused heavily upon tackling inequality. With legal underpinnings, they argued that low pay in the female-dominated care sector was a source of gender-based pay inequality.
Elsewhere, a more general moral case has been used to justify new pay deals. Both the Scottish and Welsh governments argued that a sector minimum wage was a step towards ‘fair’ pay for care workers, and the Scottish government has framed continued support for the policy in terms of its impact on women, children in poverty, and broader post-Covid recovery.
Our polling found that over three-quarters of the public think care workers are paid too little. The British Social Attitudes survey, meanwhile, shows that the main reason people in Britain are dissatisfied with social care is that conditions for staff, including pay, are poor. French policy-makers utilised a similar framing, highlighting discrepancy between the importance of care for older people, and the low status given to careers in care work. Pay reform was framed as one mechanism for increasing the status and dignity of care work.
2. Accompany pay policies with a sustainable funding model
Spending on social care has been plagued by u-turns on policy, and has not matched increasing costs, including growing wage bills driven by increases to statutory minimum wage rates. This puts a squeeze on finances, often forcing providers to charge increasing amounts to people who fund their own care.
Some governments have introduced sector-specific minimum wages. But Scotland offers a cautionary tale of some providers not fulfilling local authority contracts because they are unable to afford new pay rates introduced with their sector-specific minimum wage policy. The Scottish government did provide some additional funding for local authorities, but it seems this has not always been proportional to increased costs.
The Welsh government’s approach to funding the new sector minimum wage, meanwhile, includes the provision of funds to not only meet the costs of uplifting all care workers’ pay to the Real Living Wage, but also to allow providers to maintain pay differentials for more experienced staff. New Zealand’s approach to funding also appeared more comprehensive, at least in the short term, with $2 billion NZD ringfenced to cover increased wage bills for providers.
It is vital that the government undertakes a frank assessment of how much different policy options will cost for England. Skills for Care’s new workforce strategy includes costings for the policy options included in our report, ranging from a total annual cost of £2.2 billion for the Real Living Wage to £6.3 billion to match care workers to at least NHS Agenda for Change Band 3 (but offset to an extent by increased tax income and less public spending elsewhere). We advocate a staged approach, starting with enforcement of the statutory minimum wage. More comprehensive approaches can then be added – meaning that increased costs will be staggered. Funding should not only address increases in payroll costs, but also the costs of enforcing and evaluating a new policy. These costs must be met through additional funding flowing into the sector to avoid a knockout blow for already cash-strapped providers.
3. Create an effective enforcement mechanism
To be confident that the intended benefits of a new pay policy can be felt by all staff, frameworks must be created to ensure compliance by employers. Both Wales and Scotland chose routes that did not involve legal enforcement for the implementation of their pay policies. They have lighter-touch monitoring and enforcement, including through commissioners and ministers requesting information on a quarterly basis. One concern about this approach is that it relies more on care workers to bring forward cases of underpayment.
England, where underpayment is concerningly commonplace, also relies on workers to bring forward claims of minimum wage underpayment to HM Revenue and Customs. Low unionisation, and overall limited capital, leverage and information about rights among care workers, mean they tend to be in a weak position to contest breaches of their employment rights. Commissioners, who are often paying rates inadequate to cover the cost of care, are also in a poor position to hold providers to account.
Australia, meanwhile, offers an example of a statutory approach to monitoring provider wage compliance. Under the Aged Care Act, providers receiving public funding are required by law to provide annual public financial transparency reports about expenditure, including on staff salaries and wages.
4. Make careers in care more attractive at all levels and types of experience
Turnover in the social care workforce in England is high, and minimal pay differentials between entry level and more senior roles contribute to this. Simply increasing the minimum amount people can be paid for care work will do little to increase the appeal of long-term careers in the sector. Pay scales with clear progression pathways can address this, and rewarding skills and experience is a key feature of new pay scales in Australia, France and New Zealand. While they differ in, for example, how staff are allocated to specific pay bands, they all work to make careers in social care more attractive.
In England, while costly, the long-term ambition for many in the social care sector is a pay scale integrated with or closely matched to NHS Agenda for Change. Northern Ireland’s NHS employs care workers in its combined health and care trusts who have had their roles successfully mapped onto Agenda for Change. There is also a domestic (though small-scale) precedent. In Northumbria, insufficient availability of social care providers has led an NHS trust to directly provide some homecare. Their care workers are paid NHS Agenda for Change rates. While this is proof that this can be done, piecemeal application of Agenda for Change for care workers risks destabilising the provider market by creating large wage disparities between employers.
5. A collaborative approach is key to success
New Zealand, while an exemplar of ambitious pay reform, is unfortunately also an example of the pitfalls of not using cross-party collaboration to build longevity into a pay policy.
The sector pay scale was introduced as limited-term legislation that expired in December 2023 after a one-year extension mired in disagreement had been passed by parliament the previous year. Although the pay scale still exists, it is not legally binding, and ringfenced funding has ceased to flow from central government. The new government has also repealed the economy-wide Fair Pay Agreements Act (2022), which was intended to facilitate collective wage bargaining.
Two issues are apparent here. First, there was a failure to build consensus across, or even within, political parties around the policy – demonstrated by the widespread discontent that accompanied the passing of the amendment that extended the Act. Second, and especially problematic where this consensus is lacking, there was a failure to create a framework that would bind future administrations into continuing the policy.
Any policy in England would ideally be introduced with cross-bench support. This requires Labour and opposition parties to join in productive dialogue on the issue. This should not be impossible; members of parliament from across the political spectrum have acknowledged the need for reform in social care, and specifically for care worker pay. The new government has proposed a new Royal Commission on social care which, while not a vehicle for much-needed rapid action, could be a source of consensus-building.
Union voices were pivotal to the pay-setting processes in Australia, New Zealand and France. Australia’s pay award system seems to have succeeded in covering all care workers – and even wider ancillary roles – regardless of their contract type, setting or the type of provider that employs them. However, in France, union involvement alone was not sufficient to ensure an outcome all parties judged to be inclusive. Some care workers, including some employed by private providers, were reached by the policy considerably later than others, and frustration at the progress of the policy led to a large number of resignations in domiciliary care. An authentic, representative worker voice should be central to the development of England’s fair pay agreements.
Beyond pay
Radical reform of care worker pay is possible. Societies with many demographic and economic similarities to England have taken bold steps, and there is hope that the new government can be equally ambitious in its pursuit of a fair pay agreement for social care. International examples are inevitably limited by comparability and often by a lack of comprehensive evaluation, but can still provide useful lessons.
The lack of cohesion within England’s social care sector is, unfortunately, both a driver behind many current issues and an obstacle to future progress. A lack of a unified worker or provider voice, and the resource limitations of organisations that do represent parts of these groups, provide no obvious path to generating an inclusive dialogue within existing means. Constructing the basic infrastructure for a co-designed pay process to take place is an important step, but is a very tall order in a short timeframe.
The government is committed to going beyond simply improving wages, and this is absolutely the correct approach. Social care lags heavily behind sectors like health in terms of employee benefits and income stability, which have been shown to positively impact retention. We encourage policy-makers to make use of international learning here too (New Zealand, Wales and Australia). But more fundamentally, comprehensive reform to address the wider struggles of the social care system – from underfunding to disparities in access – is needed. This will do more to build a care workforce fit for the future than any specific pay policy in isolation.
Wales
National pay policy
Sector minimum wage (rises in line with Real Living Wage)
Eligibility
All registered workers in direct care roles
Registered workers employed by agencies
Personal assistants
Statutory basis?
No - employers expected to pass on funding
Funding
Additional national government funding to local authorities and Health Boards
Includes contribution to maintaining pay differential at lower end of payscale
Mechanism for determining wage level
Social Care Fair Work Forum
Scotland
National pay policy
Sector minimum wage (predominantly rises in line with Real Living Wage)
Applied to sleep-in shifts from 2018
Eligibility
Workers in commissioned services in the third and independent (private) sectors
Personal assistants
Statutory basis?
No - employers expected to pass on funding
Funding
Additional national government funding
Mechanism for determining wage level
Fair Work Forum
France
National pay policy
Specific increases to monthly pay for staff working in the care sector and a de-facto national pay scale for roles covered by the agreement
Eligibility
Began with non-medical staff in nursing homes, extended over time to all workers in direct care roles
Statutory basis?
Yes - French Labour Code stipulates that collective agreements take precedence over any existing employment contract
Funding
National government funding as part of wider “Ségur de la santé” reforms and investment in the health and care sectors
Mechanism for determining wage level
Collective wage bargaining
New Zealand
National pay policy
Pay scale linked to qualifications and length of service
Eligibility
Care and support workers in residential aged care, home and community care and disability support sectors
Statutory basis?
Yes - Care and Support Worker (Pay Equity) Settlement Act 2017 (expired)
Funding
Additional national government funding – for five-year settlement originally
Sector partners continuing to fund uplifts from in-year budgets
Mechanism for determining wage level
Legal action brought by unions under Equal Pay Act
Pay Equity Taskforce
Indexing
Collective bargaining
Australia
National pay policy
Pay uplifts for sector followed by role classification structure with a range of uplifts for different roles based on qualifications and experience
Eligibility
Includes broad range of roles in the sector, for example, care workers, homecare workers, nurses, and cooks
Statutory basis?
Yes – Aged Care Act places financial transparency obligations on providers (including spend on wages)
Funding
Additional national government funding for uplifts, and employer on-costs
Mechanism for determining wage level
Initial case brought forward by unions
Fair Work Commission determines awards