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NEW TUC analysis reveals benefits to business from sick
pay overhaul set to be five times the cost
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Additional £800m benefit to the Exchequer from
increased tax revenue and lower social security payouts and
£700m to the wider economy from reduced health-related economic
inactivity
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Union body says evidence shows how stronger sick pay is
vital for economic growth and urgent importance of fixing UK's
poor quality of work
The government's plans for stronger sick pay will deliver
significant financial benefits to businesses up and down the
country, which are five times the costs, according to a TUC and
WPI economics report published today (Wednesday).
The new analysis, commissioned by the TUC and carried out by WPI
using ‘reasonable and cautious assumptions' estimates an annual
£2bn net benefit to business from the government's plans to
deliver sick pay for all, paid from day one of sickness absence
through the Employment Rights Bill.
The analysis projects that the benefits to business amount to
£2.4bn - with costs to business from the reforms estimated at
£425m.
The analysis also projects additional benefits to the public
purse and wider economy:
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Exchequer benefits: Increased tax revenue and
lower social security payouts are estimated to amount to
£800m a year
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Wider economy: Reduced health-related economic
inactivity is estimated to amount to £700m a
year
The analysis is based on cautious assumptions of benefits to
business from:
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Reduced sickness absence: By staying off work
when sick, employees limit the spread of illness, and are
likely to recover more quickly and return to work themselves.
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Increased productivity: Sick workers are less
productive and risk the health of others.. Better levels of
support like sick pay are also associated with a happier
workforce.
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Reduced turnover: With employees better able
to manage their health by taking time off when ill, the risks
of longer-term absence or even leaving work altogether are
reduced.
Recent estimates from the University of Warwick suggest work
related ill-health is costing the economy tens of billions of
pounds each year.
The TUC says the findings in the WPI report – which are published
as the Employment Rights Bill is continuing its passage through
parliament - show the “urgent importance” of improving the
quality of work in the UK.
Inadequate sick pay
The TUC says for too long sick pay has been totally inadequate –
with millions of low-paid workers missing out due to not earning
enough to qualify.
The current wait period for statutory sick pay is three days,
meaning even many eligible workers are forced to go without sick
pay for the first few days of illness.
The union body says that this broken statutory sick pay system
was especially exposed during the pandemic.
The government's reforms, which will deliver sick pay for all
from the first day of illness, will be a “major step forward” and
“stop millions from facing a financial cliff edge if they get
sick”, according to the TUC.
TUC general secretary Paul Nowak said:
“Nobody should be plunged into hardship when they become ill. The
government's sick pay reforms will stop millions from facing a
financial cliff edge if they get sick.
“With sick pay rights from the first day of sickness, workers
will know they can take the time they need to recover without
needing to rush back to work.
“That's good for business and the wider economy too. A healthier,
happier workforce is a more productive workforce.
“Making statutory sick pay available to all workers - and from
day one - shows why the government's Employment Rights Bill is so
important.
“We hope this is the start of a programme of sick pay reform and
will continue to make the case for higher future sick pay rates.”
Matthew Oakley, Founder and Director of WPI
Economics, said:
"Sickness absence costs the economy - simple as that - and it
impacts affected workers severely in terms of lost earnings.
"Improving sick pay would enable people to take the time off they
need to recover and lower the number of people taking extended
sick leave, stemming the flow of unwell workers on to out-of-work
benefits and boosting productivity.
"As the Government looks for fresh ideas to give the UK a
competitive edge, a wider overhaul of sick pay and better
incentives for employers to invest in occupational health should
be front and centre."
ENDS
Notes to editors:
-TUC and WPI report: https://www.tuc.org.uk/sites/default/files/wpieconomicseconomicbenefitsofsspreformmarch2025.pdf
