The Cost of Ill-Health

The financial cost of sickness absence to business and industry are calculable and high. As the following research suggests however, the real cost of reduced employee health, although less easy to calculate, is estimated to be far higher than that lost through the cost of sick days.

Sickness Absence:

According to Office of National Statistics estimations (ONS, 2017), in the UK in 2016:

• 137.3 million work days (1.9%), an average of 4.3 days/worker, were lost due to sickness or injury absence.
• 2.9% and 1.7% of working hours were lost within the public and private sector respectively due to sickness absence.
• Organisations with the largest workforces (>500 employees) reported the highest sickness absence levels with 2.5% of working hours lost (up from 2.3% in 2013).
• Sickness absence was highest for those in the caring, leisure, elementary (e.g., bar staff hospital porters, shelf fillers), and ‘other service’ occupations at 2.7%.
• Sickness absence was lowest for managers, directors and senior officials at 1.1% of working hours, followed by those in professional roles (e.g., civil engineers, medical practitioners and legal professions) at 1.7%.

According to PricewaterhouseCoopers, in 21013, the cost to UK business for sickness absence and its associated costs accounted for 90% of the total absence bill at £28.8 billion.

N.B: The cost of absenteeism is calculated in relation to the average UK employee daily wage, whilst more generally, the real rates and costs of absenteeism are likely to be masked by a lack of comprehensive absence reporting procedures across many organisations.

Presenteeism:

The above (ONS, 2017) statistics highlight a decline in sickness absence since 2003, with a general levelling out in recent years. However, the Chartered Institute of Personnel and Development (CIPD, 2018) report that this fall in sickness absence levels coincides with year on year increases in presenteeism, i.e., where staff go into work ill. Presenteeism is proposed by the CIPD to have greater costs than sickness absence due to presentees’; taking longer to recover from illnesses, being less effective at work, being more likely to make costly mistakes and have accidents, transmitting illness to colleagues, and the lowering of workplace morale.
The cost of presenteeism is difficult to calculate, but:
• In 2016, the ERS Research and Consultancy estimated that for every £1 cost to business of absenteeism there is estimated to be an additional cost of £2.50 due to presenteeism (ERS, 2016).

• The Stevenson / Farmer Review (MIND, 2017) estimate the annual cost of mental ill health to employers as being between £33 billion and £42 billion with over half of this cost being incurred through presenteeism.
• In 2010, the UK Government’s Foresight Programme estimated that presenteeism costs the UK economy £15.1 billion each year (an amount that may well have risen with increasing reports of presenteeism).

Summary:

The real cost of ill-health to business is becoming increasingly difficult to calculate, but the general consensus is that the accumulative costs of sickness absence and presenteeism are both high and rising. The consideration of positive wellbeing as more than a lack of ill-health, or indeed a neutral state, and the link between wellbeing and desirable performance-outcomes, suggests that a lack of positive wellbeing has costs that few, if any, company can afford to ignore.