PolicyLens

Green - Labour market

Create a social-care pay agreement

Set adult social-care pay and core terms through a statutory sectoral negotiating body.

Last updated: May 2026.

Read the policy-specific methodology note

Sector scale

Skills for Care estimates 1.60 million filled adult social-care posts in England, with many close to the wage floor.

  • Central case models a GBP 1.50 hourly uplift.
  • Commissioning pass-through is the fiscal risk.
  • England-only data understate UK-wide exposure.

Core trade-offs

Care workers gain pay and terms. Local authorities, self-funders and taxpayers pay. Without funding, providers may reduce places, exit or cut quality.

  • Care workers gain directly.
  • Taxpayers and self-funders pay.
  • Provider failure risk rises.

Illustrative fiscal impact

+GBP 1.0bn to +GBP 15.0bn. Central estimate: +GBP 4.5bn.

  • Positive numbers mean public-finance pressure; negative numbers mean Exchequer savings.
  • Gross costs are separated from tax, NI and benefit offsets.
  • Private business costs are not automatically fiscal costs.
  • Behavioural responses widen the range materially.
  • This is not an official costing.

Economic impact by 2027-28

  • Jobs: May reduce vacancies if funded; without funding, provider exits and fewer places are plausible.
  • Wages: Raises pay in a low-paid, publicly exposed sector.
  • Prices: Care fees and local-authority commissioning rates likely rise.
  • GDP / productivity: Likely negative fiscally; quality gains possible but not automatic.

Assessment

A social-care pay agreement is credible only if commissioning rates rise with it. Otherwise the policy shifts cost onto providers already operating with thin margins, risking fewer care places or lower quality.

Confidence: Medium-low. Workforce scale is clear; pay target and public pass-through are policy choices.

Main risks

  • Unfunded mandate: Providers may close, cut hours or reduce quality if fees do not rise.
  • Self-funder costs: Private care users can face higher fees.
  • Compression pressure: Senior care roles may need uplifts to preserve differentials.

Safeguards

  • Fund council fee-rate increases.
  • Publish provider cost models.
  • Phase terms beyond base pay.

Academic evidence

Farber, Herbst, Kuziemko and Naidu, Quarterly Journal of Economics, 2021

Unions and Inequality Over the Twentieth Century

Unionisation historically reduced wage inequality, partly by compressing pay within and across workplaces.

Explains who may gain from collective-bargaining reforms.

Unions and Inequality Over the Twentieth Century (2021)

Frandsen, Journal of Labor Economics, 2021

The Surprising Impacts of Unionization

Unionisation can raise earnings for covered workers while shifting costs to employers.

Relevant to bargaining reforms and incidence, but not a fiscal costing.

The Surprising Impacts of Unionization (2021)

UK government evidence

Department for Business and Trade, 2026

Employment Rights Act 2025 - Economic Analysis

The ERA economic analysis estimates around GBP 1bn annual direct business cost before social-care bargaining.

Provides official baseline costs and affected groups.

Employment Rights Act 2025 - Economic Analysis (2026)

Sources

Other Green policies

PolicyLens estimates are illustrative and not official costings.