A new report from the Fabian Society is urging the government to introduce an opt-out sickness insurance system for self-employed workers and freelancers in the UK.
The Fabian Society is calling on the government to create a £5-per-month opt-out sickness insurance scheme to protect health and productivity among self-employed workers. Its report, Ill-prepared: strengthening sick pay for the self-employed, has the backing of trade unions Prospect, Bectu and Community.
There are 4.4 million self-employed people in the UK, making up 13% of people in work. The average full-time self-employed worker loses 81% of income if they are too sick to work. This is because they are forced to rely on government sickness benefits which pay very little - and younger workers lose more, due to lower benefit rates.
The report finds that many self-employed workers face low pay and high levels of insecurity. Average employee income is 14% higher than for a self-employed worker, if both are working full-time. In the creative industries or gig economy, many are only self-employed due to a lack of employee jobs in the sector.
“None of us should have to choose between our work and our health, and we know that society and the economy benefit from people being able to get well and get back on their feet. A sick pay safety net for the self-employed is long overdue, and we hope the government looks seriously at these proposals which will benefits millions of self-employed and freelance workers.” Philippa Childs, head of Bectu.
New sick pay system for self-employed workers
The Fabian Society report says that by the end of this parliament, “the government should create a sick pay system for self-employed workers, paying out at the level of statutory sick pay. The system would cover all self-employed workers unless they opt-out.”
This would be funded both through contributions by self-employed workers and a levy on the businesses that engage them, the report says. To reach the level of statutory sick pay, this would cost self-employed workers just £5 a month and those who engage them only an additional 3p per hour.
“The employment rights bill introduces welcome reforms to sick pay for employees. But we must make sure the self-employed have similar protections. Right now, the average self-employed worker stands to lose around 81% of their income when illness strikes. This can be a massive cause of financial and emotional distress, increase the likelihood of falling into debt, and pressure individuals to keep working while sick - contributing to the spread of illness and lowering productivity.” Eloise Sacares, Fabian Society senior researcher and author of the report.
The report also argues that the government should:
- Ensure self-employed people don’t lose their universal credit when claiming sickness support such as income protection insurance payouts, employment and support allowance, or the proposed new unemployment insurance benefit.
- Allow self-employed single parents who can’t work due to sickness to continue to receive the childcare costs element of universal credit, as is currently the case for employees.
“One illness away from financial ruin”
Commenting on the proposals, Liam Byrne MP, chair of the Business and Trade Select Committee, said: “Too many of Britain’s self-employed live one illness away from financial ruin … This report shows a better way: an affordable system of shared responsibility that protects workers, supports businesses and strengthens the economy. 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.”
Written by Rachel Miller.