Adult social care labour supply: pay increase impact assessment

1. Introduction

In the year ending 31 March 2022, an estimated 88,965 people accessed Care at Home and 44,840 accessed Care Home services in Scotland. These represent approximately 45 percent and 25 percent increases compared to corresponding figures in 2017/18 (Public Health Scotland). A key challenge for the social care sector therefore is in building and maintaining a workforce to meet this growing demand. Social care services in Scotland are provided by a mix of private, public (i.e., local authority in-house) and third-sector providers. These providers individually make pay and employment decisions that are, in turn, subject to wider labour market forces. Given the decentralised nature of the social care sector, central government policies aimed at supporting the care workforce are thus subject to factors outside of policymakers’ direct control.

One policy currently in place is the minimum wage for the social care staff. Since April 2023, the wage floor for social care staff in Scotland has been £10.90, compared to the £10.42 national minimum wage. This wage floor was raised to a minimum of £12.00 in 2024.^[1] A key question is “How will the increase in the social care wage floor affect employment in the sector?” A separate, and higher, minimum wage in the social care sector relative to other sectors could potentially support employment through two channels. First, it directly increases relative pay for the lowest-paid care staff compared to other sectors. Second, it could also support employment indirectly, if social care employers respond by shifting their pay schedules upwards, thereby increasing relative wages for people above the minimum wage level. Both primary and secondary channels work by inducing a premium between social care and non-social care wages, which, in turn, improves recruitment of new staff and/or retention of existing employees.