October 18, 2020
This report from UK think tank the Social Market Foundation argues for a savings auto-enrolment scheme to help bolster financial resilience amongst low-paid workers.
This paper argues that policymakers should introduce a savings auto-enrolment scheme to help bolster financial resilience amongst low-paid workers. Key Points By making the Job Support Scheme less generous than the Job Retention Scheme, the Government is implicitly shifting part of the economic costs of Covid restrictions onto employees themselves. But employees are badly placed to bear such costs. In the hospitality sector – which faces shutdowns across much of the country – over half of workers are low paid. This is more than any other sector of the economy. Financial resilience among such workers is low. Our analysis shows a third of households in the lowest income quartile (“the poorest 25%”) have no bank or other savings that they can draw on in an emergency – such as when facing the sort of pay cuts now approaching them. Policy Recommendations While immediate additional support for low income households and workers is needed, the Government also needs to focus on improving financial resilience in its economic recovery plan. Given the widely-acknowledged success of pensions auto-enrolment, a savings auto-enrolment scheme could go some way to bolstering financial security.Read Full Report
By Jonathan Cribb; Tom Waters; Thomas Wernham; Xiaowei XuRead more