With 1 in 4 care home workers poised to leave their jobs in the next 12 months, the hiring crisis in the sector is getting worse. The problem is already starting to spill over into the public sector with hospital beds blocked by infirm patients left with nowhere to go. Amid the cost of living crisis and near full employment, workers are telling their employers they simply cannot exist on the wages on offer in the sector.
The issue has been exacerbated by the post-Brexit reduction in the available workforce. As a result, the sector now faces a supply and demand reckoning. On average, care home workers are paid £9.50 an hour, usually on a zero-hours contract basis. Meanwhile, Amazon offers an £ 11.50-day shift rate for new starters with zero experience rising to £22 per hour overtime rate.
Can the industry afford to continue offering such pay rates to attract or retain staff to do this difficult, emotional work for society's most vulnerable people, or do they risk turning patients away and suffering a reduction in their long-term income?
The picture is now being further complicated by pressure exerted on the margins of the UK’s leading care home providers by a formidable, familiar foe. COVID-19 has begun to move up the priority list of stories on the evening news, as we move towards winter. If we have a difficult flu season on top of the building COVID wave, could this delay difficult pay decisions that really cannot wait?
Plimsoll’s latest analysis of the Care Homes market, suggests the sector certainly has the capacity to absorb the required increased wages costs. Margins across the market are averaging nearly 7% and the values of operators have jumped 4% in the latest year. The latter measure compares to a UK average increase in company values of 2%
Within the industry, there is a growing divide in valuation performance based on size. The UK's 10 largest care home operators saw their average values fall by 11%. Meanwhile, companies outside the top 10 saw average values up by 5%.
According to the latest Plimsoll Analysis, average company values across the care homes market are still rising However, with serious demand for higher staff costs, how much margin will companies be willing to sacrifice to retain staff in 2023?
Care Home operators make strong profits and have enjoyed a strong recovery from the pandemic. But, how do they compare to other care providers catering for the elderly and infirm?
- Live-In Care Providers values are up 33%
- Hospices values are up 65%
- Home Care Providers values are up 17%
Britain’s growing population of over 65’s is driving unprecedented demand within the care home sector. However, with many Europeans having voluntarily repatriated and the indigenous population enjoying a choice of better-paid, lower-stress employment options, there appears to be a stark choice. Pay better wages or face a staffing crisis that could bring the whole industry to its knees.
To help our listeners make sense of many of the impacts within this sector, outlined above, we are offering a free insight report looking at business value trends across the care sector
For a free copy of the latest Insights Report, please email me at c.evans@plimsoll.co.uk and I will get that processed immediately.
