Group income protection (GIP) solutions have the potential of unlocking the economically inactive who have left the labour market, the Confederation of British Industry (CBI) believes.
However the trade body warned that there was also a lot of confusion among employers about what GIP was and how it could benefit their businesses.
This is according to Laurence Raeburn-Smith, senior policy adviser at the CBI, (pictured) who was speaking at the Financial Inclusion Commission virtual summit this week.
Raeburn-Smith explained while GIP solutions formed an integral part of employers’ employee value proposition (EVP) to recruit and retain talent, such solutions also had the potential to unlock a bigger pool of labour.
“There is the clear moral case in a cost of living crisis that you need to protect those workers and certainly those workers who are suffering most at the bottom of your income distribution,” Raeburn-Smith said.
But he added there was a clear business case for GIP.
“One as a tool for retention but also if you see the capability for attraction within the context of the recent labour market trends with an increasing number of older workers leaving the labour market and an increasing number of people leaving the labour market because of sickness,” he continued.
“That’s quite interesting from a CBI perspective because that becomes an element to employee value proposition.
“It’s not just a part of your EVP that you can use to attract workers from another business to come to yours to prevent that churn, it’s part of the EVP that can be used to unlock the economically inactive which has a huge benefit because it’s unlocking a bigger pool of labour.”
Confusion continues
But Raeburn-Smith added that in his conversations with members there had been a lot of discussion about wanting to take out GIP cover but not being able to afford it as well as confusion around the product.
“I think it is quite clear that there is a lack of understanding about it as a product,” Raeburn-Smith said.
“Both among HR managers and employees and also some concerns about how these products interact with Universal Credit and tax and will they affect those who you most want to protect in your workforce.”
However, Raeburn-Smith said the dial is shifting in terms of organisations seeing the value of these sorts of products.
“For one, there is the clear moral case in a cost of living crisis that you need to protect those workers and certainly those workers who are suffering most at the bottom of your income distribution,” he said.
“But there is also a clear business case – one as a tool for retention but also if you see the capability for attraction within the context of the recent labour market trends with an increasing number of older workers leaving the labour market and an increasing number of people leaving the labour market because of sickness.”