A new report from the Scottish Fabians and funded by abrdn Financial Fairness Trust shows that the UK government’s benefit system is so threadbare that many workers can expect their incomes to collapse if they leave the workplace for sickness, caring or unemployment.
In Time of Need features interviews with people out of work in Scotland and a You Gov poll of adults in Scotland.
31% of Scottish workers say that if they lost their jobs they could only maintain their current standard of living from savings for 4 weeks or less
54% expect to often struggle to make ends meet if they lose their job and 30% expect often to have to go without food and heating.
80% who gave an answer said job seeker’s allowance would replace three-tenths or less of their earnings if they lost their job and claimed the benefit
At some point in their lives the vast majority of people will experience a break in work due to unemployment, sickness, caring for babies and caring for disabled or older people. The research shows that the UK system does not provide adequate levels of income security or the support needed to transition back into the workforce.
Research in Scotland showed a system which was inflexible to individual circumstances and provided inadequate support at a time when people needed it most. Many experiencing the system for the first time were shocked to find an inadequate patchwork of benefits that fell short of the support they needed but were also dismayed about the inconsistences in that support.
Jobseeker’s allowance replaces just 12 per cent of average earnings and statutory sick pay just 16 per cent. Other countries have strong income protection policies that provide financial security when people leave a job or stop working temporarily.
The report supports plans for a UK wide solution to protect the incomes of working people should they need to take a break from work. But it also presents proposals that the Scottish government could adopt as a start.
UK-wide employment insurance
The plan would return the UK to routinely providing income protection on the basis of people’s earnings. It is loosely modelled on Canadian employment insurance and the Covid furlough scheme. People who stop working would typically be paid half their current or recent earnings (with a cap on the amount payable to high earners around 60,000).
First steps in Scotland
Five years on from the devolution of social security to the Scottish Parliament the report shows how devolved powers in Scotland could lead the way on building income security.
The report calls for measures to start building income security in Scotland now. The proposals focus on employability and helping those who experience ill health or care for others to return to the workplace
- JOB SEEKERS SUPPLEMENT to raise job seekers allowance to match maternity pay for the first six months of unemployment
- EMPLOYMENT SUPPORT SUPPLEMENT for those on employment and support allowance to match maternity pay for the first 12 months after stopping work
- WORK-SEARCH ALLOWANCE for the former self-employed
- CARERS ALLOWANCE SUPPLEMENT to raise the new Scottish carer’s payment to the level of maternity pay for the first 12 months after someone leaves work
- INCOME TRANSISTION PAYMENT for key industries or regions to allow transition from one industry or another combined with training.
- PAID TRAINING SCHEMES with income support for people who are unemployed or self-employed
- PAID CARER’S LEAVE with employers encouraged to sign up to pay carers for a week a year of carer’s leave and a subsidy for SMEs to pay it.
The Scottish Fabian paper argues that building income security for all in Scotland is a big idea that could capture the public’s imagination. The YouGov poll shows these policies are popular – and importantly for Scottish politicians this is true across the constitutional divide. For example, 87 per cent support the proposals for paid Carer’s leave.
Scottish Fabians national manager Katherine Sangster said:
“Five years on from social security devolution, Scotland has not grasped the opportunities available from its new social security powers. Holyrood should not just be creating “a sticking plaster” to counter the worst failings of the UK welfare system but designing something better. We call on Scottish politicians to use the devolved powers to start to build a social security system that protects incomes when people have to leave a job, and is designed around principles of contribution, adequacy, and connection to work.”
Mubin Haq, CEO of the Financial Fairness Trust said:
”We have a patchwork of threadbare support when people cannot work. The Scottish government has made some attempts to improve our safety net but major reforms are needed. Change is supported by the public who back a series of measures to help those out of work. Immediate action can be taken now. Not only could this help prevent hardship but also help employers to keep their workforce.”
