OPINION: The pay rise paradox

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Not one person among us would turn down a pay rise if it was on offer in the new year. For many in the care business, that pay rise is likely to come in April when the government imposes the new National Living Wage (NLW) rate of £7.20 for everybody outside London.

Care home owners love to complain about the NLW to each other (and at events like November’s Care England annual conference), while at the same time praising their staff and saying that they certainly deserve the best wages possible.

Not surprisingly, few mention that this government has already cut their corporation tax rates in the last parliament from 28% to 20%, and will keep cutting it down to 18% by 2020. In other words, they berate the government for forcing them to raise wages for their worst-paid staff, while ignoring the fact that they will keep far more of their profits than under the last Labour government.

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The counter-argument is that care home businesses cannot make profits if wages rise at the same time that CQC is hiking its fees and local authority spending is being squeezed. This would be a powerful point were it not for the fact that the best-run care home groups are paying for rapid expansion out of their profits.

In the first two big interviews with Care Home Professional, Alykhan Kachra at Country Court Care, and Avnish Goyal at Hallmark Care Homes, both t0ld similar stories of buying or building several luxury care homes per year for the rest of this decade.

And both say they are financing this expansion out of profit – or what would be profit were it not being re-invested.
Both Avnish and Alykhan say that the quality of their teams are fundamental to their success, and they would happily pay higher wages as part of staff development programmes that also focus on team building, training and recognition for outstanding work.

This is interesting, because it is these non-pay-related initiatives that raise employee satisfaction more than rising pay, according to research that we analyse as part of a salary survey published in the December issue of Care Home Professional magazine.

There are certainly challenges facing the care home industry as we head into the new year, but they will not affect all businesses equally, and those that lead their teams with the greatest attention, skill and passion will outperform those that rely on paltry pay rises, and particularly those that simply want to blame the government for their troubles.

 

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