Evidence library

This report shows that while some improvement has been seen in recent years, low pay is still a significant issue in the third sector and there are a key areas of pay inequality that need to be addressed.

• In 2021, 14.1 per cent of jobs in the third sector were paid less than the Living Wage. This is higher than the public sector (5.5 per cent), but lower than the private sector (22.1 per cent).
• Areas with lower levels of low pay in the sector include London, the South East and Scotland.
• In Scotland around 12.5% of sector staff were paid less than the Living Wage in 2021.
• The proportion of below Living Wage jobs in the third sector has declined over recent years. In 2015, 16.9 per cent of jobs were low paid, compared to the current figure of 14.1 per cent, a drop of 2.8 percentage points.

Changes to the funding landscape including the shift to commissioning of services can encourage a ‘race to the bottom.’ As third sector providers compete to cut costs and win contracts this can hit those on low pay the hardest. Low pay in the third sector is reinforcing inequality:

• Jobs held by women are more likely to earn less than the Living Wage than men (16.6 per cent compared to 10.3 per cent).
• Certain racialised groups are more likely to be paid below the Living Wage. ‘Other ethnic,’ Pakistani and Bangladeshi, and Black African, Black Caribbean and Black British groups all have above average proportions of workers earning below the Living Wage.