UK Government abandons the vulnerable and fails to set up pandemic recovery

 

For over a year now, countries across the world have faced the greatest health crisis in living memory. As a result, governments worldwide have introduced a number of extraordinary measures, including business closures, social distancing, and travel bans. However, alongside these public health interventions, has come increased social support. Therefore, this article sets out to analyse the type of support that is in already in place to help individuals during this type of health crisis, as well as the new policy changes. We will consider exactly how effective these measures are in the UK and across various countries worldwide.

Sick pay

Firstly, let’s look at statutory sick pay. This has become a controversial matter in recent times, with many people across the world having to take time off work to recover or isolate during the coronavirus pandemic. A recent report from The Compensation Experts, that looks at European countries specifically, has demonstrated that there is very little consistency across countries in Europe in terms of sick pay. Indeed, it is evident that certain countries provide a better scheme than others. So, how does the UK perform in this area? Well, according to this new research, the situation in the UK is rather gloomy. In fact, the UK offers the third worst sick pay scheme in Europe.

In the UK, employees that are off from work due to ill-health are eligible for just £96.35 per week, for up to 28 weeks. Furthermore, the UK Government’s involvement with supplying this sick pay ceases after just the fourth day of the employee being absent from work. After this period, the employer is required to step in and continue the payments.

On the other end of the spectrum, Iceland is ranked highest for offering the most effective and comprehensive sick pay scheme in Europe. In fact, many of the small, independent countries in Europe offer a very effective sick pay scheme, as demonstrated in the table below.

Country European Rank Minimum Sick Pay Maximum Sick Pay Maximum Period
Iceland 1st 100% 100% 2 days for each week worked
Norway

 

2nd 100% 100% 52 weeks
Denmark 4th 100% 100% 30 days + 22 weeks
Finland

 

7th 70% 100% 44 weeks
UK

 

40th £96.35 per week £96.35 per week 28 weeks

Unemployment Benefit

In the last quarter of 2020, the unemployment rate (of those aged 16 and over) was 5.2%. While measures such as the furlough scheme have helped to protect jobs during this health crisis, many have still been made redundant and companies have closed. Moreover, the number of people out of work is expected to grow further. Therefore, it is important to consider the type of support that is offered to unemployed people in the UK and how this compares to other countries across the world.

To offer a comparison of unemployment benefits across different countries worldwide, we will refer to the OECD database of benefits in unemployment. In particular, we will look at the share of the individual’s previous income after 2 months and then after 6 months. Of the 40 OECD countries included in this database, the UK offers the worst unemployment benefit after 2 months and the 4th worst after 6 months.

So, let’s take a look at how some of the small independent countries compare.

Country Benefits in unemployment, share of previous income (after 2 months) Benefits in unemployment, share of previous income (after 6 months)
Denmark 82% 82%
Croatia 78% 39%
Iceland 75% 63%
Norway 68% 68%
Finland 58% 58%
Ireland 39% 39%
UK 22% 22%

This data is very interesting, as it shows that small independent countries are able to support their unemployed to a much greater extent and for a longer period. The UK offering the worst unemployment benefits in the short-term (after 2 months) is very significant and perhaps, shows why many people in this country have faced such hardship during this health crisis.

Coronavirus spending packages

While the UK stimulus package, that allowed for the furlough scheme and various grant programmes to be put in place, has protected jobs across the country, it is worthwhile comparing the UK economic package that was put in place at the start of the pandemic to others across the world. Research from Professor Ceyhun Elgin has tracked the responses of 166 countries worldwide. So, how does the UK compare.

Country Economic Stimulus Package, as of May 2020 (% of GDP)
UK 5%
France 9.3%
Germany 10.7%
Italy 5.7%
Japan 21.1%

As this table shows, the UK’s initial stimulus package was actually provided a much smaller percentage of its GDP than many other countries. So, how did this situation look a year down the line?

Country Economic Stimulus Package, as of May 2021 (% of GDP)
UK 17.8%
France 23.8%
Germany 39.3%
Italy 37.7%
Japan 56.1%

Again, the UK has still spent a much smaller percentage of its GDP on challenging, supporting and recovering from this health crisis than many other nations across Europe and the rest of the world.

Furthermore, while the furlough scheme has benefitted businesses across the UK so far, the UK Government has refused to extend the scheme beyond September 2021. Citizens Advice Scotland have said that this will force one in seven Scots into an income crisis. In contrast, Germany’s short-time working scheme will continue to provide the more generous support that has been available since the start of the coronavirus crisis until the end of 2021. France’s equivalent scheme will continue even longer, with eligible employers being able to claim support until 2023.

Conclusions

Throughout this health crisis, the UK Government has continuously suggested that this country offers the most generous support and “world beating” schemes. However, when you consider the international data, a very different picture emerges. Indeed, with regards to both the direct COVID financial support, as well as the schemes that were already in place, such as unemployment benefit and sick pay, the UK is clearly underperforming. Furthermore, much of this data has shown that small independent countries are more equipped and willing to support the vulnerable citizens of their populations both in normal times and during such health crises.

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