On April the first this year, the National Minimum Wage that employers are obliged to pay staff increased to £7.20 an hour for those aged 25 and over. As a result of this policy, millions of low paid workers have seen their salaries increase by 50 pence an hour, which will make a significant difference to their pay packets each month. The social care sector has been at the forefront of the changes, with many of its 1.3 million employees qualifying for the mandatory increase. This is well-deserved too; social care workers perform crucial work within society and should well remunerated for the differences they make to the lives of those they care for.
While the individual benefits of the increase are absolutely welcome, this does not disguise the fact that the sector – which has faced cuts to Council funding now coupled with higher costs – is ill-equipped to deal with the financial fallout of the changes. Prior to the increase to the minimum wage, the financial situation of the social care sector was already precarious, with local authorities experiencing a £1.1 billion shortfall in their social care budgets in 2015 alone.
One particular area where this has caused difficulty is among rural homecare providers. Last year’s EU working time directive meant that workers’ travel time is now classed as working time – which has greatly reduced the efficiency of a business model in which one care worker travels to multiple clients across a large area. Since the introduction of the new minimum wage, rural providers now face an inflated wage bill for travel-time that doesn’t generate revenue. These firms have had to show considerable resourcefulness when tackling the issue, and their innovations have been impressive. Firms are now planning their workers’ routes with greater precision, and are reducing time their workers’ waiting times between jobs – a positive outcome for the efficiency of the industry.
In order to overcome the adverse circumstances they face as a result of a changing financial model, care providers will have to become increasingly agile and innovative. However, there is a limit to the escape-acts that the sector can continue to perform in the face of financial challenges that are verging on farcical. Policymakers need to consider a much improved, coherent and long-term financial solution.