Workers with mental health conditions face pay gap of more than £8,000, research suggests

Report says entrenched barriers to work are behind ‘shocking’ income disparities, with ‘limited’ sickness policies also to blame

The annual median income for workers with common mental illnesses such as anxiety and depression is just over two-thirds (68 per cent) of the income of people without those conditions, research has revealed: the equivalent of an annual earnings gap of £8,400.

A report by the Mental Health and Income Commission – part of the Money and Mental Health Policy Institute – found that when people with mental health problems were in work, they were more likely to be in lower-paid occupations and face significant challenges in accessing higher-paid jobs.

Those with mental health conditions were also more likely to be in receipt of some form of benefit such as universal credit or employment and support allowance.

Experts have warned this gap was a result of “entrenched barriers to jobs and workplace progression” for people with mental health problems.

The research, which combined data from the ONS and other sources with dozens of interviews with people living with or supporting people with mental ill-health, found that just two-thirds (64 per cent) of those with mental health conditions had asked their employer for reasonable adjustments. Of these, a fifth (20 per cent) had their requests rejected, while almost half (48 per cent) only had their requests partly met.

Sickness policies were also cited as part of the problem because, for those who are unwell, sickness policies can be their only fallback. While 70 per cent of employees have some contractual sick pay (CSP) coverage through their employer, survey respondents said such policies could often be “limited in scope, duration or generosity”. Once these have run out, or if CSP is not offered by an employer, statutory sick pay (SSP) is the other avenue of support available.

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For people with recurring problems, periodically having to rely on such limited income support can erode their financial resilience as well as potentially worsening their health. “SSP was a lot lower than I was expecting, so with that in mind you have to return to work long before you are ready,” one survey respondent said.

Several barriers to finding work were also highlighted. For example, the report said rejecting candidates who have gaps in their employment history was often used as “an easy way to whittle down a field of candidates”, particularly for competitive roles. However, this could unfairly impact on people with mental health problems – as well as other groups who have legitimate reasons for employment gaps.

In general, the report said, changing employment involved huge uncertainty for people with mental ill-health – including concerns about a potential employer’s attitudes to mental health or the availability of flexible working – which meant people with mental health conditions often stayed put for fear of discriminatory attitudes from new employers.

“As with entering work, gaps in work histories, stigma and conscious or unconscious discrimination against people with mental health problems can all mean that they are overlooked for jobs, training or promotion,” the report said.

One research participant said: “Employers need to be more open about salary scales and I need to feel that I am judged on my skills, results and competence, rather than my hours worked, mental health issues and working patterns.”

The commission has called for systematic employment reforms to tackle these issues, urging the government to make it mandatory for companies with more than 250 staff to report on the pay gap between employees with mental health conditions and others, and the number of flexible working requests denied and granted – a move that “would help expose inequalities in the workplace and discriminatory work practices”.

Helen Undy, chief executive of the Money and Mental Health Policy Institute, said if the government was serious about ‘building back better’, it had to address the employment barriers “leaving many people with mental health problems dreading a return to normal after the pandemic”.

“The way the country has adapted to home working and other flexible arrangements has proved that we can do it. For millions of people with poor mental health, the idea of going back to business as usual – and losing this flexibility – is a huge worry,” she said.

More than two in five (43 per cent) people with mental health problems said they were worried about returning to their usual working arrangements after lockdown, amounting to around five million people.

Reacting to the report, Rachel Suff, senior employment relations adviser at the CIPD, said: "We know that people with mental health conditions face a significant employment gap, and are far more likely to fall out of work than those without. This is likely to have been exacerbated by the pandemic, and both the government and employers need to take action to ensure this inequality doesn't worsen. 

“Proactive and practical steps are needed, such as the right to request flexible working from the first day of employment. We also need urgent reform of SSP, including removing the lower earnings limit for eligibility as well as increasing the rate of SSP to be significantly closer to the equivalent of someone earning the national living wage."