Workforce on 'financial cliff edge'

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Twice as many people insure their mobile phone or pet as their monthly wages, research has found.

A survey showed that workers are risking their financial security as nearly one in four (23%) admit to having no back-up plan if they were unable to work long-term due to illness or injury.

One in 10 people will face a period of sickness absence of more than six months during their working lives but more than half (51%) of employees mistakenly assume that their employer would pay their full salary for at least three to six months in the event of illness.

In fact companies are only legally obliged to pay Statutory Sick Pay, currently £85.85 a week, for a maximum of six months.
The research, conducted by think-tank Demos, found that more than a third (35%) of those asked said they would rely on their own savings.

However, when they were asked the current level of savings they could access in the event of emergency, nearly half (49%) had less than £2,000 to support themselves and their family - the equivalent of just one month's average salary.

While 13% said they have insured their pet and 12% their mobile phone, just 6% said they had taken out personal income protection insurance to protect their monthly wages.

The findings come from a survey of 2,024 adults, which features in a forthcoming Demos report into financial protection in the UK, which highlights surprisingly low levels of personal financial responsibility in the face of tough economic conditions and high long-term unemployment.

Max Wind-Cowie, researcher at Demos and author of the report, said: "These findings show a workforce on a financial cliff edge, one misfortune away from being unable to provide financially for themselves or their family. That twice as many people would rather protect their iPhone or Blackberry rather than their own monthly wages shows just how little aware of the risks people are.

"Many employees lack understanding about the realities of long-term sickness, find benefits confusing, or don't even know what is available to them. Given the fact workers seem to rely a lot on their employers, it's no surprise that they are looking to their firms to help them better plan for their individual financial security."

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