UK charity staff are paid an average of 7 per cent less per hour than equivalent staff in other sectors, new research has found.
Analysis by the think tank Pro Bono Economics, published today, shows that voluntary sector workers faced a collective “wage penalty” of nearly £1.5bn in 2019 compared with workers elsewhere in the economy.
The pay gap widens throughout someone’s career in the charity sector and peaks at 9.4 per cent for those aged between 46 and 50, the paper says.
It also found that graduates face a £40,000 shortfall in earnings if they work at a charity for 30 years, compared with other sectors.
With the size of the charity sector workforce rising faster than other parts of the economy, this means “an increasingly large section of the UK’s workforce is earning less than they could if they worked in other sectors”, PBE said.
The report says: “Many charity sector workers are not primarily motivated by pay but by purpose.
“However, offering comparably lower wages means that charities have a more limited pool of people willing or able to contribute their skills by working within that sector.
“That limited pool is also less diverse, with lower pay likely to be making it more difficult for people from less advantaged backgrounds to take up opportunities in the sector, a long-standing problem that diminishes charities’ effectiveness, acting as a drag on their ability to support the people who need it.”
Staff costs account for about 40p of every £1 spent at charities, according to the paper, compared with 30p across the economy as a whole.
The analysis says that, while charities have historically offered more flexible working, they risk losing that distinctive advantage as businesses shift to new models after Covid-19.
Charities have also lagged behind other sectors on recruiting more diverse staff and “systemic low pay risks further entrenching this position”.
The report argues that “low levels of pay do suppress job satisfaction among employees and are therefore likely to impact on performance and even employee churn”.
Jamie O’Halloran, economist at PBE, said: “Charity pay has long been a subject that provokes strong reactions.
“It is a complex topic, and people are passionate about ensuring that the money they donate makes the biggest impact possible to the causes and groups that they support.
“Proper investment in staff is one of the ways that money can be put to the greatest possible use.
“As an employer, the charity sector does not sit in isolation. It has to compete with the rest of the economy for staff and it relies on the fundraisers, volunteer managers and service delivery professionals whose work sustains it.
“The widening pay gap identified in this research poses a serious threat to the sector and its impact, especially during a cost-of-living crisis. Lagging pay could lead to an exodus of talented staff and acts as a barrier to many from diverse backgrounds considering a career in the sector.”
Neil Heslop, chief executive of the Charities Aid Foundation, said: “Volunteers and workers in the charity sector are largely driven by a desire to help people and make a difference.
“But they face the same concerns as those in other sectors about how they can continue to look after their families experiencing rapidly rising bills.”