There have been a number of calls over the last year for the rate of statutory sick pay (SSP) to be increased and its scope widened.
Given this, we look at the arguments for and against increasing statutory sick pay (SSP) for the wider economy as a whole.
Statutory Sick Pay (SSP): Calls For Increase
As we highlighted in a previous article, a report from the Office for National Statistics (ONS) found that the rate of sickness absence in the workplace reached 2.6% in 2022, up 0.4% compared to 2021 (2.2%), and up 0.8% compared to 2020 (1.8%). This is the highest rate recorded since 2004, when the sickness absence rate reached 2.7%.
This prompted calls for statutory sick pay reform. In a letter, for example, MP’s Robert Buckland and Priti Patel called for an increase in statutory sick pay to all so that workers can take the time off they require to fully recover. This would avoid people working whilst sick, becoming more severely ill as a result, thereby resulting in long term ill health.
Buckland and Patel pointed out that back in July 2019, when the Government consulted on the issue, 75% of those who responded were of the view that statutory sick pay should be extended to all, including the 2 million workers who are not currently eligible for it.
There have also been other calls for reform of statutory sick pay, including the following:-
- a report by the Resolution Foundation stated: “too many lower earners….lack many of the things that higher earners take for granted: the lack of adequate sick pay, for example, means illness is bad for the financial, as well as physical, health of low-paid workers in a way most higher earners never experience.“
- The Chartered Institute of Personnel and Development (CIPD) found in a survey that 62% of employers believe that the rate is currently set too low. 17.2% of the workforce also do not even qualify for SSP, as they either earn below the qualifying threshold (currently £123.00 per week) or are self-employed. Hence, the CIPD call for the qualifying earnings threshold to be removed in order to widen eligibility, and for new measures to protect the self-employed. The CIPD also call for SSP to be increased to a rate that at least matches the National Minimum Wage and the National Living Wage.
- The general secretary of the Trades Union Congress (TUC), Paul Nowak, argues that: “Nobody should be plunged into financial hardship if they become sick. But Britain has one of the most miserly sick pay rates in Europe. This is disproportionately punishing low-paid workers and leaving them without a safety net. We must fix our broken sick pay system by making statutory sick pay available from day one and raising it to the level of the real living wage. The lack of decent sick pay cost us dear during the pandemic. The government should have learned this lesson.”
The Arguments For Increasing SSP
The arguments for increasing statutory sick pay and widening its scope include the following:
Ensuring Financial Security
The current rate of SSP stands at £109.40 per week, which is significantly lower than the average weekly wage in the UK. Raising the level of statutory sick pay would enable individuals to meet their basic living expenses, thereby reducing the risk of falling into debt and poverty whilst recovering from illness.
Promoting Public Health
A higher rate of statutory sick pay can contribute to better public health outcomes. By ensuring that individuals can afford to take time off work when they are unwell, there is a reduced risk of sickness spreading within workplaces. This supports the overall well-being of society by preventing the onset of larger health crises.
Enhancing Productivity And Job Satisfaction
Improved sick pay provision leads to enhanced employee well-being, job satisfaction, and productivity. When employees feel supported by their employers during times of illness, it fosters a positive relationship and loyalty towards the organization. It also reduces presenteeism – the practice of coming to work whilst ill, which can often result in decreased productivity and prolonged recovery periods.
Reducing Health Inequalities
Widening the scope of Statutory Sick Pay to include all workers, regardless of their income level and employment status, would help reduce health inequalities. It would ensure that low paid employees and the self-employed, who often face a higher risk of falling into poverty, are not further disadvantaged due to sickness absence.
Supporting Small and Medium-sized Enterprises (SMEs)
Increasing Statutory Sick Pay would benefit employers, particularly Small and Medium-sized Enterprises (SMEs). By providing more comprehensive sick pay, employers can build stronger relationships with their workforce, resulting in higher staff retention rates and reduced recruitment costs. Additionally, employees who receive adequate support during illness are more likely to return to work promptly, minimizing disruptions to business operations.
Wider Economic Stimulus
Widening the scope of Statutory Sick Pay to cover more workers can have positive economic effects in relation to the economy as a whole. When individuals receive fair compensation during periods of illness, they are more likely to spend on essential goods and services, thereby injecting money back into the economy. This increased consumer spending can contribute to local business growth and job creation.
The Arguments Against Increasing Statutory Sick Pay
The arguments against increasing statutory sick pay and widening its scope include the following:
Cost to Employers
Increasing Statutory Sick Pay would result in higher labour costs for employers, which could ultimately lead to reduced job opportunities and potential business closures. Small and medium-sized enterprises (SMEs), moreover, may struggle with the additional costs of providing enhanced sick pay, potentially affecting their ability to compete and grow in the market.
Affordability For The Wider Economy
Increasing Statutory Sick Pay could potentially require allocating more funds from the national budget, putting pressure on public finances. Critics contend that diverting resources towards enhanced sick pay and widening its scope may limit funding for other crucial areas such as healthcare, education, and infrastructure development.
Potential Abuse and Fraud
Expanding eligibility criteria or raising benefit levels might encourage individuals to take advantage of the system. Some argue, pointing to the level of furlough fraud and welfare benefits fraud, that more generous benefits would incentivize employees to call in sick more frequently, potentially resulting in a loss of productivity and added expenses for employers.
Adverse Impact on Employment
Critics argue that increasing statutory sick pay and broadening its scope may lead to unintended consequences for employment rates. Higher sick pay could discourage workers from returning to work promptly after an illness, leading to longer absences and reduced productivity levels. Employers might become more reluctant to hire individuals with a history of frequent or extended sick leave, potentially creating barriers for job seekers and increasing unemployment rates.
Potential Distortion of Market Dynamics
Critics suggest that a rise in statutory sick pay may may distort the labor market and lead to increased pressure on wages, as employers seek to offset the additional costs associated with providing enhanced benefits. This could create wage inflation and potentially result in job losses as businesses try to manage their expenses.
Conclusion
The arguments surrounding the increase in Statutory Sick Pay (SSP) and of widening of its scope are complex and multifaceted. Whilst proponents emphasize the potential benefits to public health, employee well-being, and reducing health inequalities, opponents raise concerns about the financial impact on employers, productivity, compliance issues, and of the overall economic consequences. Balancing these perspectives is crucial to ensure a comprehensive approach that supports both workers and employers, whilst maintaining the long-term sustainability of the social security system.
