UK Urged to Give Companies Incentives to Hire the Long-Term Sick

The UK government faces a daunting challenge: how to integrate 2.8 million economically inactive individuals, many of whom are long-term sick, back into the workforce. This is not merely a humanitarian issue but an economic imperative. The current welfare system, described by the government as "broken," is holding back both individuals and the economy. The proposed reforms, while ambitious, risk pushing 250,000 more people into poverty. The solution, according to think-tanks like the Good Growth Foundation (GGF) and the Institute for Fiscal Studies (IFS), lies in offering businesses incentives to hire those on long-term sickness or disability benefits.

The GGF suggests a bold move: a one-year "holiday" on National Insurance contributions for businesses that hire employees from these groups. This policy, estimated to save the Treasury £1.1 billion by cutting welfare payments while boosting income tax revenues, could be a game-changer. The GGF's calculations assume an additional 150,000 people would re-enter the workforce, on top of the 16% already projected by the government. To break even, the policy would need an extra 67,000 people to take up a job. This is not just about numbers; it's about creating a supportive ecosystem where people can thrive.



The IFS, meanwhile, advocates for breaking the link between starting work and losing welfare benefits. Tom Waters, an associate director at the IFS, argues that the current policy is opaque and discourages claimants from re-entering the workforce. The fear of losing benefits if a job doesn't work out is a significant barrier. The government's recent move to legislate a "right to try" for disabled people is a step in the right direction, but more needs to be done. Ensuring that those on sickness or disability benefits can get back into work without automatically losing their payments could be a powerful incentive.

The Commission for Healthier Working Lives, established by the Health Foundation, echoes these sentiments. Their final report highlights the need for a new approach to work and health, outlining seven key recommendations. These include reforming statutory sick pay rates, introducing a new 'vocational rehabilitation benefit,' and creating a caseworker-led service to provide the right support at the right time. The report underscores the importance of prevention, early support, and incentives to support preventative action. The cost of inaction is high and only likely to grow, given the rising prevalence of long-term health conditions.

The Chartered Management Institute (CMI) also weighs in, urging employers to rethink support for staff with long-term health conditions. Petra Wilton, the director of policy and external affairs at the CMI, highlights the need for upskilling managers, fostering healthy and inclusive workplaces, and prioritizing flexibility at work. Managers are on the frontline of supporting employees, and their role is crucial in facilitating necessary adjustments and ensuring that conversations about health are approached with care and compassion.

The economic benefits of these policies are clear. Paid sick leave, for instance, has been linked to favorable business outcomes, including lower spread of disease, improved employee morale, and higher profitability. A study by Florida Atlantic University and Cleveland State University found that paid sick leave is associated with less occupational injury, presenteeism, and employee death. The benefits to organizations include improved job satisfaction, retention, and productivity. The costs associated with increased absences may be largely mitigated by these gains.

However, the path forward is not without challenges. The government's proposed cuts to welfare are unlikely to generate substantial savings, and the risk of pushing more people into poverty is real. The GGF's proposal to give businesses a tax holiday is a start, but it needs to be part of a broader strategy that includes breaking the link between work and losing benefits, as suggested by the IFS. The Commission for Healthier Working Lives' recommendations provide a roadmap for a more coordinated and effective workplace support and benefits system.

In conclusion, the UK government must act decisively to address the crisis of long-term sickness. The proposed reforms are a step in the right direction, but they need to be bolstered by incentives for businesses and a more supportive welfare system. The time to act is now. The future of the UK's economy and the well-being of its citizens depend on it. The world must choose: cooperation or collapse.