Sick pay reforms could cut absence levels and provide a £4.1bn boost to the UK economy, according to new research.
It comes as the number of people off work due to long-term illness remains around record high levels.
New analysis from WPI Economics found that higher rates of employer sick pay provide longer-term benefits which more than offset the increased cost to firms.
It claimed that the economy would receive a £4.1bn boost if every worker on Statutory Sick Pay received increased sick pay from their employer from day one, which it claimed would also reduce economic activity among the UK workforce.
Britons currently receive £109.40 a week in statutory sick pay for up to 28 weeks.
The report claimed that one in three workers on sick pay are currently living in poverty.
Matthew Oakley, director of WPI Economics, said: “The UK’s sick pay system is just not working.
“This evidence shows that reforms would be a win for workers, businesses and Government alike.
“Even with a conservative approach to estimating the benefits of policy change, we found that these significantly outweigh the short-term costs.”
Last month, the Office for National Statistics reported a record 2.6 million Britons were economically inactive due to long-term sickness over the three months to April.
Workers with access to paid sick leave were found to be 28% less likely to be injured or ill than those without and reduce costs for the NHS, the report also said.
Sir Robert Buckland, MP for South Swindon, said: “Improving workers’ sick pay is a win-win policy for Rishi Sunak, supporting hard-working people and boosting our post-pandemic economic recovery.
“The Government should act now on this welcome evidence in order to safeguard the future health and prosperity of our nation.”
Unison general secretary Christina McAnea said: “The pandemic underlined how sick pay needs a total overhaul.
“Those earning the least often don’t qualify, or they face such a huge drop in wages they could risk working when they shouldn’t.”
A Department for Work and Pensions spokesperson said: “We know for many people there are significant benefits to being in work, including for their wellbeing.
“We’re investing £3.5bn to help millions, including those with long-term illness, to start, stay and succeed in work as part of our drive to boost the economy and bring down inflation.
“Our plan is working with a fall in inactivity of nearly 300,000 people but for those who can’t return to work yet, employers can choose to pay more occupation sick pay for longer, while Universal Credit provides a strong financial safety net for those needing extra support.”