Cost of Absence
What is the cost of employee absence?
Indirect and hidden costs can cause employers to spend the equivalent of about 9% of their annual costs on absence. Overall, the median cost of absence per employee was £5549 in 2015, a reduction from £59510 in 2013. The estimated cost remains considerably high, however by tackling sickness absence the employer can benefit from retaining human capital, reducing staff turnover costs, improved reputation and a more engaged and productive employee. With today’s UK economy along with Brexit, businesses are facing direct and indirect costs that negatively impact their business operations, as well as the bottom line. This combined with the current population levels of obesity, diabetes, mental health problems and long term conditions sets a very stark picture of where we are and where we will be in the future. In fact, the National Institute for Health and Care Excellence (Nice) suggest that employers and organisations need to seriously consider the future provision of their employee health strategies. Here
Employers are shouldering the burden of costs related to an increasing unhealthier workforce, costs related to absenteeism, and costs associated with employees who are not away from work but are not fully engaged in working due to continual illness and long-term medical conditions.
It makes sound business sense to introduce a health and wellbeing strategy for an organisation whatever the size be it small or a multinational. Employers are not the only people considering the benefits of wellness programs.
Long-term sickness absence costs UK businesses £4.17billion a year
The current picture for the UK
The Centre for Economics and Business Research 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. The report 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.
The cost of long-term sickness absence, the cost burden faced by employers from a number of areas including occupational and statutory sick pay, absence management costs and the costs associated with staff recruitment and training replacement staff.However, businesses 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 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.
Early intervention services can result in an estimated £3.95 billion being returned to businesses.
To avoid these preventable business costs, employers should implement a strategy which mitigates the impact of sickness absence. An effective way to do this is through early intervention with health & wellbeing services which help employers and employees get the balance right.
“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 health and wellbeing services and more importantly, ensure that employees take advantage of the services on offer to them.