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PAYROLL COSTS


Payroll costs including wages and NIC costs are taken from accounts available at the time of inspection.


Payroll costs, as a proportion of total revenue in the personal care sector have continued last year’s trend showing a significant increase, whilst nursing payroll costs have fallen, reversing last year’s rise (see Figure 3). In personal care, payroll costs increased across both periods to stand at 53.3% in H1 2018, an increase of 1.0 percentage points over the year. The nursing sector recorded a fall of 0.5 percentage points over the year to stand at 56.9%, albeit there was an increase from H1 to H2 2017.


Last year we noted that percentage payroll costs in the two sectors, when viewed over a two-year period, had broadly moved in line with each other. This year, due to the recent fall in nursing payroll costs, personal care fees have risen by 2.6 percentage points against a nil increase for nursing fees over the last two years. Both sectors, whilst having fallen from the peak


percentages noted in 2010-11, are now less than one percentage point off their respective 10-year highs, showing wage cost pressures remain a challenge for the industry. However, the movements in the percentage costs noted do not show the full picture. By analysing the percentage costs in conjunction with the ‘total income’ suggested by the KPIs, both sectors’ costs in cash terms have increased by a similar percentage over the last two years, although nursing payroll costs have increased more significantly over a 4-year time frame.


The elderly care sector as a whole remains impacted by the effects of the National Minimum and Living Wage legislation and the well-documented nursing shortage. However, our latest KPI data suggests cost pressures appear to be having a greater impact on the personal care sector, in percentage terms at least, narrowing the gap both with the nursing sector and the recent peak payroll cost seen in 2010.


FIGURE 3: PAYROLL COSTS PC


NC


35.0 40.0 45.0 50.0 55.0 60.0 65.0


Source: Colliers International KEY POINTS NURSING CARE


HAS FALLEN 0.5 PERCENTAGE POINTS SINCE H1 2017


10 PERSONAL CARE HAS


INCREASED 1.0 PERCENTAGE POINT SINCE H1 2017


HEALTHCARE MARKET REVIEW 2018


PERSONAL CARE CURRENTLY UNDER GREATER PRESSURE


%


H2 03 H1 04 H2 04 H1 05 H2 05 H1 06 H2 06 H1 07 H2 07 H1 08 H2 08 H1 09 H2 09 H1 10 H2 10 H1 11 H2 11 H1 12 H2 12 H1 13 H2 13 H1 14 H2 14 H1 15 H2 15 H1 16 H2 16 H1 17 H2 17 H1 18


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