In the fight against Covid-19, not all the weapons are high-tech. Many governments have dusted off an innovation that dates from 1883: paid sick leave. Almost 140 years after Germany under Chancellor Otto von Bismarck became the first country in the world to pass a law on sick pay, the policy is having a burst of popularity in much of the developed world.
Half of all OECD countries have expanded or initiated paid sick leave this year. Many countries have extended it to previously uncovered groups, such as the self-employed, and increased its generosity. The rationale is simple: sick pay helps to slow the spread of the virus by enabling the infected (and the possibly infected) to stay home from work.
Canada and New Zealand have brought in a special Covid-19 sickness benefit that is higher than the usual one (C$500 per week in Canada; NZ$585 in New Zealand). Slovenia has increased its benefit level from 80 to 90 per cent of the person’s wage. The US, which didn’t have a country-wide sick pay policy before the pandemic, has introduced two weeks of mandatory paid sick leave for those who have Covid-19 symptoms or have to quarantine, paid at 100 per cent of their regular pay (excluding employees of the biggest companies).
The UK, by contrast, stands out for the flimsiness of its sick pay and its failure to do much about it. The country’s statutory sick pay is just £95.85 a week. For the almost 2m low-paid workers who earn less than £120 a week, it is zero.
Rishi Sunak, the British chancellor, has extended support to the self-employed, and made SSP payable from day one rather than day four. But these are small tweaks compared with the expansions implemented by other countries. The UK has the lowest mandatory sick pay for Covid-19 sufferers in the OECD as a proportion of the average worker’s earnings. Yet Mr Sunak has repeatedly ignored calls from the TUC, the union umbrella group, to increase SSP’s value and extend coverage to the lowest paid.
On the surface, this isn’t a problem for everyone. Only 26 per cent of UK employees with sick pay rely on SSP. Others have access to more generous company schemes, some of which pay 100 per cent of wages. But the skew of these schemes is all wrong for fighting a pandemic. Government data suggests 75 per cent of managers (who are able to work from home anyway) are covered by company schemes, dropping to 43 per cent of those in caring, leisure and other service occupations (whose job requires them to mix with people).
“If I went off sick I would literally go from almost £400 a week to £95 a week,” one care worker told me. She would still quarantine if she had symptoms, for the sake of the elderly people she cares for, but she wouldn’t know how to cover her bills. A bus driver I spoke to this week was on the penultimate day of his quarantine on SSP. He had already fallen behind on his car finance loan.
Some academic surveys and other pieces of research suggest the low level of sick pay is contributing to the spread of the virus because some people cannot afford to stop work. An official study, for instance, found that care homes that offered their staff sick pay were less likely to have cases of coronavirus than those that didn’t.
This month — seven months after the coronavirus pandemic started — the UK government offered £500 self-isolation payments to some poor households, although coverage is patchy and the application process has already run into problems. Increasing the value of sick pay, as other countries have done, would be smoother and more comprehensive, though more expensive. The Resolution Foundation think-tank calculates it would cost £200m to extend UK sick pay to the lowest-paid, and £2bn to increase its value to £160 per week (assuming the state picked up the bill).
Mr Sunak presumably wants to avoid making improvements to the British safety net that would be politically hard to unwind in future. But this is the wrong approach. As the OECD notes, “the financial cost of providing paid sick leave to quarantined workers is small in comparison to the cost of them not isolating and spreading the virus further”.
Covid-19 has already cost the UK more than £300bn, according to the Institute for Government think-tank. Even after the pandemic is over, a less punitive sick pay policy would probably help both the economy and public health. Studies from Spain, Germany and the US show that inadequate sick pay leads to people working when ill, having relapses and spreading infections to colleagues.
Mr Sunak often talks about the “balance” he wants to find between keeping the infection rate down and preserving people’s livelihoods. Fixing the UK’s threadbare sick pay policy would do both.
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