In the UK, £25 billion exists as an extra so-termed ‘hidden cost’ to businesses, arising from lower productivity among people working through sickness. However, this is a smaller sum globally since UK workers are among the least likely to take sick days, and most likely to work through illness.
The analysis comes from the centre-left Institute for Public Policy Research (IPPR) Commission on Health and Prosperity and it reveals the annual cost of employee sickness has risen by £30 billion since 2018. Most of this increased cost (£25 billion) is from lower productivity, with only £5 billion due to a rise in sick days.
Translated across the economy, this means employees now lose the equivalent of 44 days’ productivity on average due to working through sickness, up from 35 days in 2018, and lose a further 6.7 days taking sick leave, up from 3.7 days in 2018.
To determine the cost of these productivity losses from ‘presenteeism’ or ‘absenteeism’, researchers used the net daily wage of a worker with median salary (salary minus taxes and national insurance contributions). This wage cost was then multiplied by the number of days lost due by the total number of employees in the UK. This methodology is regularly used to determine lost productive output, though it is likely to be an underestimate as most employees would produce more than their wages.
With the right support in an appropriate job, people with some health conditions can benefit from good work. However, working when sick can also be counterproductive. When compelled to work despite being ill – because of poor work culture, limited access to sick pay, financial insecurity or other factors – employees can slow their own recovery time, increase their risk of further sickness later, and spread infectious illnesses to others – all lowering productivity.
Working through poor health appears to be more common among those from marginalised ethnic groups, people in lower quality jobs and workers lacking formal qualifications. For example, those who are Black or Asian are twice as likely to work through sickness compared to those who are white British, all else being equal.
To counter these issues, the IPPR is proposing a health plan which reimagines the role of business in health – clamping down on businesses that harm health and scaling up businesses that create good health.
The think tank argues this would help the new government achieve health, prosperity and economic growth.
The plan includes:
- Incentives: A new tax incentive for companies that commit to significant improvements in the health of their workforce, including the security, flexibility and pay of their staff, focused on SMEs.
- Regulation: A new ‘do no harm’ duty for employers, regulating them on health outcomes, not just safety inputs
- Investment: New compulsory reporting on worker health – modelled on climate emissions reporting – to help private investors differentiate between health-orientated and health-harming businesses.
Commenting on the measures, Paul Devoy, CEO of Investors in People, states: “All the evidence shows there is a clear link between employers having a positive culture of wellbeing in their organisation with productivity and sustainable organisational performance. Focusing on systematically leading, supporting and improving a culture of wellbeing has long term benefits for all employers who make that commitment to their staff.”
