UK statutory sick pay offers ‘very little insurance’, think-tank says

Statutory sick leave in the UK offers workers ‘very little insurance’ against illness and compares poorly with other wealthy countries, new research suggests.

However, according to the Resolution Foundation think tank, the UK already has one of the highest minimum wages in the world, and this trend will improve further by 2024.

From the group Report Low Pay Britain argues that the minimum wage needs to rise even further, alongside higher standards for sick pay, which it says would benefit the financial and physical health of the lowest paid workers – as well as benefit the economy as a whole.

Lower statutory sick pay

Sick pay in the UK only covers about 11 percent of the average wage of a full-time private sector worker in the first four weeks of illness, compared to the OECD median replacement rate of 64 percent, according to the Resolution Foundation.

Currently, the vast majority of European and OECD countries pay sick pay from day one as needed and do not impose a waiting period for eligible workers. In the UK, payment is zero for the first three days of sick leave.

The Resolution Foundation said today: ‘The UK is one of the few European countries that does not have mandatory means-tested payments.’

The report also suggested that “low-income workers receive a poorer version of sick pay compared to high-income workers.”

For example, according to the think tank, more than half of private sector workers earning less than £20,000 expect to receive only or no SSP if they have to take a week off due to illness. This compares to about a tenth of those earning more than £50,000.

The 1.6 million workers in the UK who earn less than £123 a week are not eligible for any statutory sick pay at all.

The Resolution Foundation said: ‘SSP in the UK offers very little insurance against illness, especially when compared to other wealthy countries.’

But the SSP system in the UK is relatively unique in that the low fixed sick pay is paid exclusively by employers for a period of up to 28 weeks.

The Resolution Foundation wants the UK to introduce a “more generous” SSP system, one based on 65 percent income replacement that gives workers with unpredictable hours “more control” when it comes to sick leave.

As well as lower SSP rates, the think tank said the UK also offered fewer holidays than other comparably wealthy countries, adding that UK maternity leave offered a ‘much lower replacement rate’.

UK minimum wage should rise further, think tank says

While SSP levels in the UK may be lower than in some other countries, minimum wages continue to rise.

Currently, minimum wages in the UK are among the highest in the world, according to the Resolution Foundation.

For workers over the age of 23, the national living wage in the UK is currently £10.42 per hour. And workers must be at least school age to be paid the national minimum wage.

If certain targets are met, the UK looks set to have better minimum wages than Australia, France and Germany by 2024, according to the Resolution Foundation.

It said: ‘If the target of reaching two-thirds of the median by 2024 is reached, the UK’s minimum wage relative to full-time workers is likely to rise to 62 per cent.

“This would put the UK’s minimum wage above that of France and Korea if those countries don’t make similar increases.”

It added: “To date, a rising minimum wage has not had a significant negative effect on employment, so the minimum wage has been an unequivocally successful policy.”

However, the think tank said the minimum wage did not benefit the low-wage self-employed and “has a smaller impact on low weekly wages.”

The think tank wants further progress to be made on minimum wages in the UK.

It said: ‘On the minimum wage, the government must decide what remit should be given to the Low Pay Commission beyond 2024, when the current target of two-thirds of the median hourly wage is expected to be reached.

“The government needs to set a new target path that continues the recent pace of upgrading, potentially reaching a “bite” of 73 per cent of the median hourly wage by 2029.

“But policymakers need to think more carefully about a framework for deciding when to stop upgrading, which requires difficult judgments about the relative weight to be given to wages and employment.”

The Resolution Foundation noted that offering higher wages and sick pay could lead to higher prices for consumers, particularly in sectors such as the hospitality industry.

A spokesperson for the Ministry of Work and Pensions said the government is “determined to ensure that work pays and to further improve workers’ rights”.

Anyone who is concerned is not getting the required minimum wage when they should contact Aces.