UK workers are risking their own financial stability by failing to protect themselves in the event of long-term sickness absence.
This is according to new research from think-tank Demos, which found that respondents were twice as likely to insure their mobile phone or pet as their own income.
One in 100 UK workers will face a period of absence totalling over six months during their working lives. Despite this, half (51 percent) of paid employees assume their employer would pay their full salary for three to six months. Employers are legally obliged to pay Statutory Sick Pay, £85.85 a week, for a maximum of six months.
A further one in four respondents (23 percent) admitted having no financial measures in place should they be unable to work long-term. More than a third (35 percent) said they would rely on savings, despite half (49 percent) saying they had less than £2000 to support themselves and their family.
The majority of under-45s surveyed in the survey of 2,024 adults said they would welcome financial protection support from their employer. Three-quarters (77 percent) of workers said their employer did not offer insurance support.
New Government legislation, such as the pensions auto-enrolment scheme, will shift further financial responsibility onto employers.
HR must view employee financial stability holistically, with responsibility shared between employer and employee – obviously the employer cannot be fully liable but they must show willingness to help in the ways they can in order to support staff. Codifying the types of support offered can help engagement and ensure staff are aware of the process and the support they’ll receive if they do need to go off on long-term absence.
Max Wind-Cowie, researcher at Demos, said: “These findings show a workforce on a financial cliff edge, one misfortune away from being unable to provide financially for themselves or their family. That twice as many people would rather protect their iPhone or Blackberry rather than their own monthly wages shows just how little aware of the risks people are.
“Many employees lack understanding about the realities of long-term sickness, find benefits confusing, or don’t even know what is available to them. Given the fact workers seem to rely a lot on their employers, it’s no surprise that they are looking to their firms to help them better plan for their individual financial security.”
Peter O’Donnell, CEO of Unum, commented: "One in 10 of us will be forced to take a leave of absence from work due to illness or injury during our working lives. A quarter of those who do leave work fall into poverty within 12 months.
“Given the risk and potential impact, it is no surprise that consumer organisation Which? describes Income Protection as a ‘must-have’ for UK workers. Workplace protection policies can benefit employees and businesses alike and are typically cheaper and more easily available than individual cover. It’s vital that concerned consumers ask their employers about the employee benefits that may be available to protect their family’s wellbeing.”
