A new report out urges the government to introduce a sickness insurance system for the self-employed, and end the “threadbare support system” that leaves them without security
Self-employed workers deserve sick pay to end the risk of millions being “one illness away from financial ruin”, a think tank has claimed.
A new report out today from the Fabian Society urges the government to introduce an opt-out sickness insurance system for the self-employed, and end the “ threadbare support system ” for the 4.4 million self-employed in Britain.
Supported by trade unions Prospect / Bectu and Community, the report found that many self-employed workers face low pay and high levels of insecurity, with the average employee income 14% higher than for a self-employed worker, if both are working full-time.
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It also found self-employed workers face a 81% pay cut when they fall sick, if they work full time and are aged 25 or over. The Fabian Society is now urging the government to create a sick pay system for self-employed workers, which would cover all self-employed workers unless they opt-out.
This would be funded through contributions by self-employed workers as well a levy on the businesses that use them. This would cost self-employed workers just £5 a month and companies who engage them an additional 3p per hour. It also called for immediate reform to Universal Credit, allowing self-employed single parents who can’t work due to sickness to continue to receive the childcare costs element of universal credit, and for an expansion of co-operative ‘bread funds’ – which allow self-employed workers to support each other if they become unwell.
Responding, Labour MP Liam Byrne, Chair of the Business and Trade Select Committee, said: “Too many of Britain’s self-employed live one illness away from financial ruin. “A workforce that loses over 80 per cent of its income the moment sickness strikes is a workforce left dangerously exposed.
“We cannot prosper as a nation if millions are left without protection.
“Ministers should study these proposals carefully. And then they should act. Because a country that values enterprise must also value the security, dignity, and health on which that enterprise rests.”
Fabian Society Senior Researcher and author of the report Eloise Sacares said: “The employment rights bill introduces welcome reforms to sick pay for employees. But we must ensure that self-employed people gain similar protections.“Right now, the average self-employed worker stands to lose 81 % of their income when illness strikes. This can cause financial and emotional distress, increase the likelihood of falling into debt, and pressure individuals to keep working while unwell – contributing to the spread of illness and lowering productivity.“A fairer sick pay system for the self-employed, would see workers and the businesses that hire their services sharing the cost of sick pay before the end of this parliament. And in the long-term, the state should work towards providing both employees and the self-employed with much stronger income protection during periods of illness.”
Head of Bectu, Philippa Childs said: “The lack of an adequate sick pay regime for the self-employed means that our members are often put in truly desperate situations, knowing that periods of illness could cost them far more than just their health and lead to dangerous spirals.”
Community Union Head of Policy & Communications, Dominic Armstrong added: “If we don’t take the steps soon to provide the UK’s ever growing self-employed workforce with the support they need, we are simply storing up problems for our economy and NHS in the future.”
A DWP spokesperson said: “While many self-employed people already choose to take out some form of insurance or income protection, we want to ensure the welfare system is always there for those who need support. That includes those facing hardship if they cannot work and are not entitled to Statutory Sick Pay.
“That’s why we’re fixing the broken system we inherited, to genuinely support people into work – backed by £3.8bn of investment – while ensuring there is always a safety net for the most vulnerable.”
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