A new report from the Centre for Economics and Business Research (Cebr) estimates the cost of long-term sickness absence – absences of six months or more – at £4.17 billion to private sector businesses in the UK. And with an estimated 1 in 4 people now experiencing mental health problems at some point in their life – causing over 70 million working days to be lost each year – mental illness represents a significant proportion of this cost: some £1.17 billion a year.
The report, commissioned by employee benefits provider Unum, shows the cost of long-term sickness absence is a growing problem: increasing from £3.13 billion in 2012 and, as the make-up of the workforce changes and the number of older workers increases, it is set to reach £4.81 billion by 2030 – a 15% increase.
However, businesses of all sizes can take measures to protect themselves from these costs. The research demonstrated that stepping in early to provide support at the first signs of a health problem, before it becomes more serious, reduced the duration and associated costs of long-term sickness absence. Actively using early intervention services, such as vocational rehabilitation, can reduce the average length of absence by 17% for all conditions, with those with mental health conditions seeing the biggest impact with a reduction of 18%. That means a reduction of more than a year (60 weeks) for the average long-term absence of seven years or turning an absence of seven months into six.
Absence management expert Adrian Lewis, of Activ Absence, said “In our experience most businesses are using manual systems to manage absence and the only place it is even recorded is remotely via the payroll system. This means that staff who need support don’t identified until their illness is already a long term issue and employers lose a valuable opportunity to intervene and get a positive outcome for everyone.
“There is a historic ‘fear’ of technology in HR because there has been too much ‘tech talk’ and not enough focus on the benefits, thankfully the ‘scared of IT’ culture is changing and whilst these figures make depressing reading, most of the businesses we talk to are looking to change – systems like ours identify challenges early on at line manager level, meaning wellness initiatives and individual support can be directly targetted as soon as a problem is identified.”
There is also financial support available to mitigate some of the costs of absence. Group Income Protection (GIP), which provides a financial back-up plan for employees in case of long-term illness or injury, can provide employers with a payback of £61 for every £100 spent on GIP premiums through avoiding Occupational Sick Pay (OSP) and other costs associated with sickness absence. But crucially the Cebr study shows that actively using early intervention services included as part of GIP packages can increase this payback by around 10% – an additional £270 million pounds to UK businesses – or £66 for every £100 spent.
Peter O’Donnell, Chief Executive Officer, Unum said; “Long-term sickness absence is prevalent amongst the UK workforce; 1 in 10 people will be unable to work for more than 6 months due to illness or injury during their working life, and the average absence lasts 7 years. Arguably, with fewer members of staff, small and medium sized business are harder hit by the impact of a long-term absence, but employers of all sizes can implement a strategy to help mitigate these costs.
“An effective, cost efficient way to do this is through investing in a GIP plan with access to early intervention services, which helps employers step in when an employee shows the first signs of having a health problem, before it becomes more serious.
“Ensuring your employees are healthy and happy isn’t just the right thing to do – it also has a direct impact on the bottom line. Smart businesses should provide their employees with these services and, more importantly, ensure that employees take advantage of the services on offer to them.”