Report calls on Government to work with firms
Pooling HR resources to cut costs could make income protection (IP) a more viable benefit for smaller organisations to offer, according to a political think tank.
A report by Demos published today noted that despite IP providing benefits to employers, employees and the state, such as improved morale and productivity, just 9.4% of the UK workforce is covered by an IP product, which compares to around 30% of the workforce in the US.
The paper, which was funded by group risk provider Unum, found that IP is a particularly rare benefit among SMEs, and there are a number of issues holding employers back from offering it. Reasons cited by employers for not offering IP include employees not asking for it, excessive bureaucracy, and a fear that IP will incentivise workers to go off sick.
As such, Demos is calling on the Government to work with businesses to develop easier group access to IP products.
It argues that small businesses should be encouraged to pool together to provide financial education and protection for employees – perhaps through local Chambers of Commerce – to ensure IP is not reserved for employees of large corporations.
The report suggests that pooling HR resources could help SMEs save costs.
Max Wind-Cowie, head of the Progressive Conservatism Project at Demos and author of the report, said: “In an era of stagnating wages and increased concern about financial insecurity, the role of insurance and long-term financial planning has never been more important.”
He added: “This research makes a strong case for employers taking an interest in their workers’ financial security out of enlightened self-interest. Government needs to work with business to take protections that are currently available to the few, and extend them to the many.”
The report, Duty of Care, is available here.