Perceptions on Protection: opportunities to support a changing workforce

Today’s workforce has a protection problem.

New technologies, globalization and demographic shifts are driving wholesale changes in the working world. The traditional career model is eroding, mobility across industries and geographies is increasing.

This creates flexibility, but less security over employment and income. Meanwhile, traditional social protection frameworks are yet to adapt to the evolving realities of work.

As a result, responsibility for insurance, savings and pensions choices is increasingly falling to individuals themselves, as financial support from traditional sources - including employers and governments - shrinks.

Workers can’t shoulder this problem alone. The financial services industry can and should be part of the solution with advisers playing a key role.

Zurich and the Smith School at Oxford University are investigating the potential for agile worker protection. This is flexible protection, provided by multiple stakeholders, addressing various key points in individual career paths. We recently conducted a study that helps us better understand how people see the changing world of work and how they might respond over the longer term. The study looked at more than 16,500 people in 15 countries across 4 continents. It broke down workers into different categories: age, gender and job category (manual vs knowledge based work). It then delved into specific themes: labor market status, anxiety around technology, willingness to flex, financial planning and knowledge of/ownership of income interruption-related insurance.

The results identified some clear areas where advisers in particular can support protection needs:

Protecting voluntary shifts to self-employment. 27% of respondents say they have plans to leave their job voluntarily within the next year. Of these, many appear to be readying themselves to become freelancers. And when it comes to opening up other career opportunities, similar numbers say they’d be willing to move abroad for a job. These workers will become increasingly vulnerable as they lose the support of traditional employer or state sponsored protection and pensions systems. In the UK, only around 1.2m people – of a total workforce of around 33.4m - have income protection insurance outside of an employer sponsored scheme. And of those already self- employed, just 3% said they have any cover in the event becoming too sick to work. Interestingly, 31% have already experienced illness that has meant they’ve had to take time off work – highlighting a real need for putting in place some sort of financial safety net.

Supporting retirement planning at all ages. Across countries and even age groups, people pointed to having adequate retirement savings as first among many potential personal-finance concerns. What’s more, this is a top concern by a wide margin: 44% of respondents globally said so, followed by 27% who worry most about paying their monthly bills.

Closing the gender gap. Despite being more risk averse in general, women were less knowledgeable on income interruption-related insurances and were less likely to hold it - In the UK, only 17% of women were familiar with these products and 83% owned neither. With women living longer than men, there’s a clear need for education and advice to boost women’s financial security.

Protecting the youngest and oldest tiers of the workforce – Only 31% of 20-29 year old and 34% of 55+ year old workers had income interruption-related insurances. In the UK, this figure was just 16% for the youngest workers. This compares to around 44% of 30-54 year olds. As younger workers face increased challenges through their careers and rising state pension ages necessitate longer working lives, this is a cause for concern and one where advisers can help.

Finally, the survey also highlighted the importance of country context. Even those in the same region or with similar social protection systems showed marked differences. This is why we conducted a case-by-case consideration through country profiles, in addition to our global findings.

Next steps

Insurers and advisers are among many actors with a clear stake in ensuring agile workforce protection. Later this year, Zurich and the Smith school will begin to outline how individuals, public and private organizations can play their part.

Today’s workforce protection problem is a challenge for us all. But together, we can meet it.

This article was originally published on FT Adviser