Investors urged to tackle exploitation and improve labour rights in English care sector

Author: Friends Provident Foundation

Date: 10/12/2024

The adult social care sector is under great amounts of stress, with evidence both of problematic labour conditions, opaque business models, and a lack of financial sustainability.

 

New research from the University of Nottingham, and funded by Friends Provident Foundation, highlights the role investors and government can play in helping to improve labour standards throughout the English care sector.

 

The adult social care sector in England is both important and troubled, socially and financially. There is evidence of a wide spectrum of abuse, including illegal payments below the level of the national living wage and more serious forms of exploitation, such as debt bondage, and threats of the withdrawal of sponsorship leading to the risk of deportation.

 

Around 1.79 million people, predominantly female, were employed in social care in England in 2022-23, with forecasts predicting this to increase by a further 490,000 by 2035.

 

But low wages and a lack of career progression have led to difficulty recruiting new workers in the sector, with around 152,000 vacancies reported in 2022-23.

 

The previous government turned to transnational migrant workers to address this shortfall, with 146,477 visas issued to main applicants in 2023 under a ‘Health and Care Visa’ sponsorship. This, however, was coupled with a spike in the number of labour exploitation cases reported by care workers to the UK’s Modern Slavery helpline, with 918 potential victims identified in 2023.

 

In 2017, the Competition & Markets Authority (CMA) valued the care home sector as worth around £15.9 billion a year and raised serious concerns about its long-term financial sustainability, particularly among those providers of care for local authority-funded placements.

 

The vast majority of care in England is now delivered by private, for-profit providers. Investors have a key role to play in ensuring the care sector’s financial and social sustainability. Given this influential position, they can also demand higher labour standards in the companies they finance. This would be in-keeping with investors’ commitments to be responsible actors.

 

The team behind this research, led by Dr Caroline Emberson and Co-investigator Dr Subhan Ullah from the University of Nottingham, have made a number of recommendations to investors and the UK government based on this work to improve standards in the sector.

  1. Investors with direct links to care operators and properties (e.g., private equity firms and real estate investors) should adopt measures to set and monitor labour standards and conduct labour related due diligence on the companies in which they invest
  2. Investors with indirect links to care operators and properties (e.g., pension funds) should explicitly expect private equity firms and real estate investors to follow recommendation
  3. The UK Government should legislate to ensure that care workers have the right to organise and engage in collective bargaining
  4. The UK Government should ensure that any funding improvements are tied to care quality and minimum safe staffing levels
  5. The UK Government should mandate the disclosure of legal ownership structures and human capital metrics within annual statements prepared in response to section 54 of the UKs (2015) Modern Slavery Act
  6. The UK Government should launch a public inquiry into working conditions within the care sector

 

Dr Caroline Emberson, Assistant Professor in Operations Management, said of the findings: “Our research reveals the complex financial ownership structures which underpin the provision of social care in England. Our interviews, which included representatives from pension funds and private equity investors, highlight a range of possible interventions through which these actors could help to address labour rights abuses within the English care sector.”

 

Dame Sara Thornton, CCLA Investment Management and Rights Lab Professor of Practice, said: “There are significant concerns about the exploitation of workers recruited into the social care sector. As investors we believe that active stewardship of the assets in which we invest can make a difference. This briefing is an important exploration of how investor influence can be brought to bear to protect vulnerable workers in social care.”

 

Charlie Crossley, Investment Engagement Manager at Friends Provident Foundation, said: “Investing in the care sector is a crucial underpinning to a fair and sustainable economy. This research highlights serious challenges and risks to workers. It also provides actionable strategies to drive improvement. Leading investors are already showing how more responsible practices can reshape the sector. With demographic trends pointing to growth, investors and government have an unprecedented opportunity to create a more ethical, sustainable care system.”

 

To read the full research, please click here.