Report: 4.1bn boost to UK from sick pay reform
A new report by WPI Economics predicts that sick pay reforms would result in a 4.1bn boost to UK businesses, Government and the wider economy, as it lays out the benefits that could be realised by reforming the UKā€™s sick pay policy.
Read more
The call was backed by a growing group of organisations, including Citizens Advice, Maggie's, abdrn Financial Fairness Trust and Covid-19 Bereaved Families for Justice. The letter welcomed the day-one sick pay plans from the Government but express concern that no provisions have been made in the employment bill to consult on the amount SSP is paid for all workers who claim it. Hundreds of thousands of working people each year are diagnosed with infectious diseases, cancer, mental health conditions, or injuries. They often find themselves without adequate financial support to pay essential bills like food, rent and heating.
The letter called for the Government to include an amendment to the employment bill to make provision for ministers to increase sick pay, noting "our Statutory Sick Pay system is the least generous in the OECD and is compounding the UK's twin problems of presenteeism and worsening health amongst working age people. This situation risks holding back the Government's laudable mission to grow the economy and bolster our NHS."
Despite it being a significant source of financial hardship for working people recovering from illness, consultations on the employment bill do not currently include increasing the rate SSP is paid to all workers who receive the employer benefit. SSP, paid by employers, is presently uprated each year with inflation and is £116.75 a week. The Government is expected to include a consultation on the rate of the estimated 1 million lowest earners who receive no sick pay as they are paid under £123 from their main employment.
Support for addressing the rate sick pay is paid in Parliament is growing, with over 100 MPs from across the House of Commons, including 25 Labour MPs, supportive of the case for a sick pay increase, alongside two measures already in the bill, day one sick pay and scrapping the lower earnings limit.
Previous work by the campaign, including leading health coalition National Voices, and cancer charities Leukaemia Care, Cancer 52 and Salivary Gland Cancer found that many cancer patients were deeply affected by the income losses caused by the inadequate rate of SSP, finding themselves in prolonged periods of treatment without adequate SSP and in many causes no, or slow, access to benefits. Some reported this caused them to exit their job and become economically inactive when they could have returned to work. Others reported returning to work far too soon, jeopardising their health.
Amanda Walters from the Centre for Progressive Change, who recently met the Labour growth group of MPs to brief them on the case for sick pay reform, said, "Most of us try to battle on when we're sick, but sometimes we know that going to work will only make things worse, we'll end up sicker and less productive. The Government must seize the opportunity to address the rate of statutory sick pay now and ensure workers aren't trapped in a vicious catch-22, risking their health for want of a decent sick pay system."
Richard Quigley, MP Isle of Wight West ran an SME for 20 years before becoming an MP in July; he said: "Labour's plan to Make Work Pay is a once-in-a-generation opportunity to lift workers rights. There is also an opportunity here for us to address the rate SSP is paid at, which is such a small fraction of usual earnings. Paying decent sick pay makes a tangible difference to people's lives; I know this from 20 years running an SME, where we saw the benefits of ensuring workers could take time off when they needed it. One colleague got knocked down by a car on a zebra crossing; she was worried about paying her rent. We paid her well in excess of the SSP and have been rewarded in kind by her long service. She has had a baby, and returned to work for us after her maternity leave."
">
Equally, a survey by Mind found that for some people, their sick pay had a negative impact on their mental health and wellbeing and slowed down their recovery. Two in three respondents said that the drop in income from receiving SSP caused them financial problems, which for some meant going into debt or affecting their ability to pay their bills or buy their food. Without time and space to look after their mental health to recover, people are more likely to drop out of work entirely.
The economic consequences of this are significant, as are the benefits of reforming the system. Our SSP system is the least generous in the OECD and is compounding the UK’s twin problems of presenteeism and worsening health amongst working age people. This situation risks holding back the government's laudable mission to grow the economy and bolster our NHS.
The Work Foundation in a study of 10,804 workers' employment journeys found that job security and conditions can be a factor in whether someone will stay in employment while managing a long-term health condition. In July, the IPPR’s cross-party Commission on Health and Prosperity, identified there is a £25 billion extra ‘hidden cost’ to businesses from lower productivity among people working through sickness.
A recent report by WPI Economics showed that sick pay reforms could result in a net positive £4.1bn financial benefit to business, the Treasury and the wider economy. The direct costs of increasing sick pay were outweighed by benefits including increased productivity, fewer periods of prolonged absence and better public health outcomes, because people are not spreading illness by coming into work sick.
A higher weekly amount of sick pay is needed if we are to truly address some of these problems. By improving financial security for workers, we can reap the benefits for employers and the Treasury too. We are therefore asking you to ensure that an increase in the rate is included in the Employment Bill.
We would welcome the opportunity to meet with you as a group with the Safe Sick Pay campaign to discuss how by increasing the rate of sick pay, we can deliver on the government’s vision for economic growth and an economy that provides decent jobs for every worker.
Yours sincerely
Signed (listed A-Z)
Amanda Walters, Director, Centre for Progressive Change
Clara Collingwood, Founder, Covid Bereaved Families for Justice
Dr Sarah Hughes, Chief Executive Officer, MIND
Colin Dyer, CEO, Leukaemia Care
Emma Kinlock, Founder, Salivary Gland Cancer UK
Gemma Peters, CEO, Macmillan Cancer Support
Henny Braun MBE, CEO, Anthony Nolan
Jacob Lant, Chief Executive, National Voices
Dame Laura Lee, CEO, Maggie’s
Matt Padley, Professor and Co-Director, Centre for Research in Social Policy
Mubin Haq, Chief Executive, Financial Fairness Trust
Nat Whalley, CEO & Co-Founder, Organise
Paul Roderick, Professor of Public Health, University of Southampton
Rachel Kirby-Rider, CEO, Young Lives vs Cancer
Rachel Kelso, founder, Homecare Workers' Group
Sasha Daly, Interim CEO, Cancer 52
Sofia Torres, Founding Member, Cleaners United
Tom MacInnes, Interim Director of Policy, Citizens Advice
ENDS
This letter was released as part of an exclusive in the Guardian organised by the Safe Sick Pay campaign, with 17 fellow charity CEOs, founders and directors.
">Health charities and experts today raised concerns that plans to reform statutory sick pay contained within the employment bill published on Thursday 10 October, whilst very welcome, would still leave many workers struggling to afford essential bills.
The Safe Sick Pay campaign joined MIND, Young Lives vs Cancer and the Royal Society of Public Health in welcoming the plan to pay sick pay from day one, but said the bill did not go far enough to address the difficulties of working people reliant solely on statutory sick pay (SSP) if they are ill face.
Statutory sick pay (SSP) is paid to an estimated 7 million workers and is just £116.75 a week, or £3 an hour for a full time worker. It often leaves working people off from work for spells of illness unable to afford essential bills or falling into debt.
The Safe Sick Pay campaign, now backed by over 100 organisations, is calling for a raise to SSP, alongside day one sick pay and scrapping the lower earnings limit.
A poll by Focaldata for the Safe Sick Pay campaign of 24,594 voters, conducted before the July election, found 77% of the public agreed the level of Statutory Sick Pay should be increased.
Amanda Walters, Director of the Safe Sick Pay Campaign said: “The Government’s plan to extend statutory sick pay and make it payable from day one are very welcome, but they need to go further. The low rate of sick pay is fundamentally unsafe and jeopardises workers' recovery from illness.”
“The low rate of statutory sick pay and the harm this causes workers comes up time and time again in our research with low paid workers. The issue disproportionately affects women, ethnic minorities and younger workers, often in tough manual occupations like cleaning and care.”
William Roberts, Chief Executive of the Royal Society for Public Health said: “We know that too many people don’t take sick leave when they need it, either because they aren’t eligible for support, or can’t afford the financial hit that time off would mean. This means that we see diseases spreading within workplaces, and minor health problems left to worsen until people simply cannot continue to work – not only harming their wellbeing, but often forcing them out of work for extended periods of time. Reforming sick pay so that all workers – regardless of their status – are able to take time off when they need it would be a crucial first step to harnessing workplaces to boost the health of our nation”
Professor Matt Padley, Centre for Research in Social Policy, Loughborough University said: “In recent years we have seen a growth in the number of people really struggling to meet their most basic needs in the UK. This growth in destitution is unacceptable, so it is critically important that this legislation sets out some concrete measures to increase incomes, addressing the damage done through the cost of living crisis.
“The longer that people are on statutory sick pay, for example, the bigger the financial shortfall becomes. Even being off work for a couple of weeks can cause significant shortfalls in income, with real consequences for living standards. It leaves workers potentially building up debts or running into serious financial hardship just to cover the cost of their basic material needs.”
Minesh Patel, Associate Director of Policy and Influencing for Mind, said: “The Employment Rights Bill provides a real opportunity for the government to reform statutory sick pay (SSP) and support more people with mental health problems to thrive in the workplace.
“The current rate of SSP is forcing people to choose between paying their bills and taking time off for their mental health. Increasing SSP and extending the length of time it’s paid would enable more people with a mental health problem to stay in employment, reducing re-hiring costs for businesses. We also want to see a more flexible model to allow SSP payment alongside wages, which would help people to gradually return to work rather than being signed off completely.
“This is a pivotal moment to make SSP fit for purpose and help grow our economy. We urge the UK government to go further with its reforms so that anybody with a health condition, including people with mental health problems, can remain in work.”
Rachel Kirby-Rider, Chief Executive at Young Lives vs Cancer said: “When a young person is diagnosed with cancer, their whole life is disrupted. Many have to stop work immediately to get the treatment they need, and treatment and its side effects can keep them off work for a long time. But while their usual income may stop, the bills don’t. Our research shows young people spend an extra £700 a month on average when facing cancer, on essential costs such as travel to hospital, food, parking, and rising bills such as heating to keep warm.
“The last thing any young person with cancer should be worrying about when their world has been turned upside down is whether they will get the sick pay they deserve and if they can afford to keep up with their bills. We believe all young people with cancer should have access to a safe sick pay system, that provides sufficient financial support so they can stay in or return to employment if they want and if it's right for them."
Only one in five (21%) of cleaners are allowed to take sick days which suggests that a very large majority of cleaners are being pushed to continue working while unwell.
There were many stories of cleaners being forced by their employer to choose between going into work ill or injured or not being paid. One cleaner, said:
“They told us that if we got ill they weren’t going to pay us, or they were going to sack us.”
There are various reasons why cleaners are refused sick pay. These include; employers refusing to grant sick pay, part-time contracts, agency and self-employment not including sick pay as a benefit and not meeting the ‘Lower Earnings Limit’ (currently £123 a week) required to claim statutory sick pay which has to be met through a single employer, even if cleaners earn more than this.
As a result, cleaners are often forced to work while sick and they repeatedly described circumstances that pushed them to work when they were unwell. 35% of cleaners reported turning up for work when sick.
The Safe Sick Pay Campaign, coordinated by the Centre for Progressive Change, is calling for an increase to statutory sick pay rates, to make it available to all workers by removing the lower earnings limit, and removing the waiting period which currently means workers can only access it from day four of sickness.
The Conservative Government consulted on sick pay reforms in 2019 but has not yet implemented sick pay reforms. The Labour party has yet to clarify if it will back a higher weekly sick pay amount after key changes were made at the National Policy Forum, but has backed day one sick pay and removing the lower earnings limit in its New Deal for Working People.
Under the UK’s statutory sick pay system (SSP), the legal minimum that employers must pay their employees is a flat rate payment (not-tethered to an individual’s earnings) which currently stands at £109.40. This is among the lowest rates in Europe and the UK also has one of the shortest durations of payments in Europe of only 28 weeks.
Sofia Torres, a board member of the Centre for Progressive Change and a former cleaner said:
"I used to clean the Shard, one of the tallest office blocks in London. I was one of the unseen army of cleaners, keeping the building clean and tidy for the thousands of workers. When I suffered a back injury and had to take time off sick I got no sick pay from my employer, so I had to return to work before I was ready."
Will Stronge, Director of Research at Autonomy, said:
“The UK has one of the least generous sick pay systems in the industrialised world.
“Millions of workers across the country are missing out on sick pay and this is making the workplace unsafe for everyone.”
Amanda Walters, Director of the Safe Sick Pay Campaign, said:
“The cleaning industry is in need of a clean up, despite their back breaking work, the vast majority of cleaners across the country aren't entitled to basic rights at work such as sick pay.
“When cleaners go back to work sick, they end up making more people ill. This hurts employers and our wider economy.”
Read the full report here.
This is fantastic news, as it represents the three key demands the Safe Sick Pay campaign has been calling for. Getting this on the Labour agenda is a big win for all of the organisations and individuals that have fought hard for sick pay reform. Please retweet us here.
But we can’t rest easy - it is not yet clear for example what either party's policy position will be on the total rate of income replacement, to replace the currently inadequate rate of just £109 per week Statutory Sick Pay.
The current Conservative Government has not yet backed these reforms but there is positive support from a range of Conservative Parliamentary champions. We have recently met Treasury advisers on the subject of sick pay and submitted a policy briefing.
We need to ensure that sick pay reforms happen as soon as possible, to ensure that no worker is left ill, under huge financial pressure and facing impossible choices because of an inadequate sick pay regime that further punishes the lowest paid workers in our society. To that end, the Safe Sick Pay campaign will keep pushing for these vital reforms. If you’d like to be involved please get in touch.
">- The UK would benefit from a boost of up to £4.1 billion if every worker relying on Statutory Sick Pay (SSP) received a higher rate of employer sick pay from day one. [1]
- Workers on SSP receive as little as £1.10 an hour in the first week and less than £3 an hour thereafter. One in three workers on sick pay are living in poverty.
- MPs, health experts and business leaders call on the Government to take actions on sick pay findings to ‘safeguard the future health and prosperity of our nation’ amidst worsening UK workforce health.
A report released today by WPI Economics, commissioned by the Centre for Progressive Change, finds that reforming sick pay could reduce sickness absence, presenteeism and the number of people on long-term benefits as well as boosting productivity.
The research estimates business costs of three potential reforms of the Sick Pay System.
- Day one sick pay. This would remove the waiting days requirement, so that people can claim SSP from the first day of sickness absence;
- Removing the lower earnings threshold, so that people can claim SSP regardless of the level of their earnings; and
- Increasing the rate of SSP. The report provides a range of scenarios including paying the real Living Wage, the National Living Wage (NLW) and 75% of the NLW.
The positive effects of sick pay reform would particularly benefit the increasing proportion of the UK workforce managing long-term conditions and ensure fewer workers fall out of the job market entirely. The evidence found that the direct costs of increasing sick pay were outweighed by the benefits, which include increased productivity, fewer periods of prolonged absence due to exacerbating existing conditions and better public health outcomes, because people are not spreading illness by coming into work sick.
Overall benefits to business slightly outweighed business costs, whilst the gains to Government and the wider economy were larger thanks to positive outcomes associated with reducing the benefits bill, and boosting labour supply. Broader benefits including the potential to reduce NHS costs would raise these benefits further. The research looked at each measure proposed and based the analysis on a conservative assessment of the wider evidence base.
The report recommended, in line with the policy practices of other advanced economies, that some of the direct costs accrued to businesses could be reduced by the Government sharing some of the gains through a form of business rebate for smaller employers.
The wider evidence base on positive outcomes finds that:
- Generous paid sick leave policies are shown to decrease influenza-like illness rates by as much as 23.5% in the population.
- Access to paid sick leave greatly increases the odds that a sick employee will come back to work once they recover, with one study of cancer patients finding they were three times more likely to return to work with adequate sick leave.
- Workers with access to paid sick leave were found to be 28% less likely to be injured than those without it, resulting in reduced costs to the NHS.
Matthew Oakley, Director of WPI Economics said “The UK’s sick pay system is just not working. This evidence shows that reforms would be a win for workers, businesses and Government alike. Even with a conservative approach to estimating the benefits of policy change, we found that these significantly outweigh the short-term costs.”
Sir Robert Buckland, MP for South Swindon said: “Improving workers' sick pay is a win-win policy for Rishi Sunak, supporting hard-working people and boosting our post-pandemic economic recovery. The Government should act now on this welcome evidence in order to safeguard the future health and prosperity of our nation.”
Amanda Walters, Director of the Safe Sick Pay Campaign said: “Making sick pay available for everyone from the first day of illness should be a minimum guarantee if we want a healthy, productive workforce. We are asking the Government to act now on this important reform and ensure that hard working people get the support they need to rest, recover and return to work.”
UNISON general secretary Christina McAnea said: “The pandemic underlined how sick pay needs a total overhaul. Those earning the least often don’t qualify, or they face such a huge drop in wages they could risk working when they shouldn’t. Anyone who’s ill should be given sick pay from the first day. That way, those on poverty wages, such as care workers, won’t go into work when it’s not safe because they’re worried about their bills.”
John Godfrey, Director of Levelling Up, Legal and General Group, which is in the process of implementing sick pay changes across its investment and property businesses said: “Improving the health of the UK workforce means tackling the social determinants of health, like housing, access to education, and, crucially, good quality employment, because there is an undeniable relationship between work and health. The benefits of the whole economy engaging in achieving better health outcomes are clear; if businesses, investors, and policymakers play their part, we will see lasting, tangible improvements across society and the economy.”
The Safe Sick Pay campaign has called for measures to be brought forward in the forthcoming Autumn Statement, pointing to some of the horrific experiences of some workers affected by the current regime including one cancer patient who was left without sufficient income to pay the rent as he went through his treatment.
Dan, a cancer patient and former assistant manager at a supermarket said: “A lack of adequate sick pay was a factor in my subsequent mental health problems and decision to quit my job and take a prolonged period out of work to recover.”
">