Sick Worker

Workers calling in sick due to no money for fuel

By now, people will be aware of how fast fuel prices are rising,  but we are aware of how it is impacting people who can’t make fuel stretch until payday?

One of the scariest things in finance is watching how easy it is for people to suffer one financial problem that becomes a cascade of financial problems. Back when loans were easier to get, it wasn’t so much of an issue. Of course some people would get a little behind and then a little more the week after. But lenders always had a brake to stop borrowers from sinking too far.

What we are witnessing now is something new. We are now seeing people who have no brake on their descent into financial oblivion.

Off Sick due to no fuel

One of the new issues we have become aware of is a growing number of people who are forced to take time off on the sick because they don’t have the money to get to work. They have no means of transport and would instead call in sick than explain to their colleagues that they have run out of cash.

As part of our operations, we talk to around 150 businesses, and we discuss with them their hiring intentions over the next 12 months. These conversations allow us to budget for spending on advertisements for example. It also helps lenders make lending decisions on certain demographics.

If one large employer was Amazon and they were willing to talk to us, lenders would know how to treat employees of Amazon when they apply for loans. Amazon doesn’t share these details with us, but others do.

The point is that during these types of discussions, employers are telling us that there is a noticeable pattern of staff absences in the 5 days before payday. At first, they didn’t understand why, but during further analysis, they learnt that staff didn’t have the funds to put fuel in the car or pay for their public transport.

Knock-on effects

Employers have also told us that because most lower-paid jobs didn’t provide sick pay (other than statutory sick pay), those that did, wouldn't provide it for the first four days, staff would be financially even shorter at the end of the following month. Eventually, the problem would snowball so badly that the employee would leave through a stress-related illness and find themselves on benefits.

From the staff members point of view, we do see their problem. If getting to work is becoming unaffordable when put in the context of other rising costs, what’s the point in going to lose money?

Maybe part time roles with shorter shifts will be the hardest hit. If there was a problem, this would normally be what we would expect to be hit first. 

How bad is the problem?

We are not 100% sure about the scale of this issue, but we know that it is becoming a growing problem for large retailers already struggling to retain staff.

How to fix the problem?

It’s a complex problem to fix. If companies pay their staff more, prices will continue to rise and then the staff will quickly need another pay rise to cover higher bills in the future. The spending cycle needs to stop quickly. That can happen by destroying the demand for goods.

One the other hand, if people had more access to safe and legal credit, they could borrow small amounts for fuel and then easily make back the charges by being able to get to work. Yes, bringing back payday lending would be one solution.