Employees of today are more likely to fall into financial difficulty than they were 30 years ago, according to a new report from Cass Business School.

The UK workforce has changed dramatically, becoming older, more feminised and including more disabled workers. But, employee benefits – designed to provide financial protection – have failed to adapt, leaving workers financially exposed.

According to Keeping Pace? Financial Insecurity in the Modern Workforce, commissioned by Income Protection provider Unum, there are 13% more female workers, 46% more older workers and 11% more workers who are ill or disabled, when compared to the 1980s.

However, employee benefits provision, including pensions and Income Protection, haven’t kept pace with change, resulting in a workforce that is less financially secure now than 30 years ago.

The report shows that workers in financial difficulty are less productive, and says it’s in an employer’s best interests to better protect their staff.

The report identifies three groups that are most ’at risk’ due to the likelihood of periods of unemployment: people with disabilities or long-term illnesses, older workers and employees with caring responsibilities. It finds that women are more likely to fall into one of the ‘at risk’ categories, meaning that they are disproportionately impacted by the employee benefits gap.

People with disabilities or long-term illnesses
This group is more likely to fall into unemployment, and to struggle to re-enter the workplace.
And, the number of people with disabilities or long-term illnesses has increased by 11%.

The report recommends that employers:

• Provide specialist vocational support to help employees return to work
• Offer Income Protection to increase financial security when long-term sick, and allow employees to maintain their standard of living while unable to work
• Make workplace adaptations to both help people remain in employment, and to help people back to work

Older workers
By 2020, a third of the UK’s workforce will be over 50. Yet the report finds that workers are increasingly under-prepared for old age and ill-prepared to support themselves in retirement.

The report recommends that employers:

• Partner with insurers to develop and offer group social care protection to help employees meet the first £75,000 of care costs
• Contribute a higher proportion of salaries to workplace pension schemes
• Provide higher contributions to women, to address gender inequalities caused by career breaks to have children and the increased likelihood of flexible working

Employees with caring responsibilities
There are a greater number of employees who have caring responsibilities for both children and older relatives – usually women. Past research shows that 15% of people leave work within a year of their spouse becoming unemployed for health reasons.

The report recommends that employers:

• Extend flexible working rights to older people and those with caring responsibilities, to allow them to remain in work
• Provide elective medical insurance, to speed up recovery for this group, as illness can prevent people from carrying out caring responsibilities – impacting on dependents

Keeping Pace? Financial Insecurity in the Modern Workforce states that by better supporting these groups, employers can improve employee wellbeing and productivity.

Peter O’Donnell, CEO of Unum UK, said: “More than ever, people are looking to their employers to provide the financial protection they need. A better protected workforce is good for the employer, as well as the employee.

“From our experience, we know that employees with the rehabilitation support that comes with Income Protection find it easier to transition back to work, should they leave the workforce.”

Professor Nick Bacon at Cass Business School, part of City University London, commented: “Financial insecurity has been compounded by an increased cost of living and higher levels of unemployment, meaning that employees are more likely to fall into financial difficulty than they were 30 years ago. During the same period, employee benefits have declined, leaving a gaping hole in the financial protection of today’s employees.

“Financial insecurity has a negative impact on employee health and wellbeing, and also productivity. Employers that provide benefits designed to support the financial security of their staff, such as access to vocational rehabilitation, typically see a more productive workforce.”