It’s time to reform Statutory Sick Pay to create a healthy and productive workforce
The Chancellor’s difficult second Budget, when it came, was hardly much of a surprise.
While measures like the new “super deduction” came as welcome news for business, there was less on offer for those worried about how they would cope financially if they were suddenly unable to work. In the midst of the health emergency, the Chancellor missed a golden opportunity to reform one policy that really matters to people – sick pay.
When it was introduced by Margaret Thatcher in the early 1980s, Statutory Sick Pay was a landmark reform.
For the first time, employers became directly responsible for the financial security of sick workers, sweeping away a bureaucratic system administered by thousands of civil servants. But, as the world of work has evolved, our sick pay policy hasn’t kept up.
Workers receiving Statutory Sick Pay are currently paid just £95.85 a week. It is pointlessly complicated to administer, and it doesn’t account properly for part-time or flexible working. Two million workers don’t even earn enough to qualify for this basic level of protection.
This problem has only been growing. Since its introduction, the proportion of employers providing their own sick pay has halved, from 56% in 1988 to just 28% today. This means more workers than ever are likely relying solely on what is now the lowest level of mandatory sick pay in the OECD.
While the current system isn’t perfect, it’s nonetheless an essential lifeline keeping people in work – an issue that’s increasingly as important as helping them find that work in the first place.
The Chancellor’s efforts on a ‘plan for jobs’ will depend on those vacancies being filled by a healthy and productive workforce – and avoid having those workers struggle to maintain their role because they’re trying to weigh the need to look after their health against the risk of falling behind on their bills.
Of course, the welfare system is there as a last resort, but to focus on this ignores the potential long-term impacts of the current health emergency on our economy and our labour market.
Some who have suffered greatly will be dealing with repercussions for years to come. A new system is needed that can support those taking the first steps back to work, rather than relying on benefits or help from family and friends.
The workplace is evolving too. More people expect their employers to give them more flexibility in where and how they work, to help them better balance their home and work life. Employers are finding new ways to maximise worker productivity, as well as the risks of long hours and cramped workspaces for their employees’ mental health.
Employers and employees could both do with more support than most of them have now.
Last year’s temporary rebate of sick pay costs to encourage self-isolation was a step in the right direction – but one Budget announcement that missed the headlines was that even this scheme will itself soon be shut down.
It’s not as if the political support isn’t there: pre-Budget polling by the Royal Society of Arts found 74% of Tory voters and 81% of Labour voters wanted to see sick pay increased.
So why has reforming sick pay been ignored? Maybe it doesn’t have the same lobbying power behind it as other measures. But also because government has focused its attention on programmes to find new work for those affected by sector shutdowns.
As the current crisis subsides and we slowly return to the office, voters’ attentions will turn to whether the government can bring forward measures to make our daily working lives better.
Reforming Statutory Sick Pay is one way to do just that, reducing the risk of workers falling into financial hardship through no fault of their own, and helping many thousands who fall ill each year to focus on what matters – their health – rather than whether they can put food on the table.