The Centre for Economics and Business Research (Cebr) reports that UK businesses face a staggering £4.17 billion annually due to long-term sickness absence.
- Mental health issues contribute significantly, accounting for £1.17 billion of the total cost each year.
- Over 70 million working days are lost annually in the UK due to mental health problems, impacting workforce productivity.
- Proactive intervention and early support can reduce the duration and costs associated with long-term sickness absence by up to 18%.
- Group Income Protection (GIP) plans, with early intervention services, are financially beneficial for businesses, yielding substantial payback.
A report by the Centre for Economics and Business Research (Cebr) provides a detailed economic evaluation of the impact of long-term sickness absence on UK private sector businesses. The cost is estimated at £4.17 billion annually, driven largely by absences of six months or more, with mental health issues accounting for £1.17 billion of this figure. These absences result in the loss of over 70 million working days each year, emphasising the severe impact on workforce productivity.
The analysis highlights the increasing trend in costs, which have risen from £3.13 billion in 2012 and are projected to reach £4.81 billion by 2030. The shift in workforce demographics, particularly the growing number of older employees, contributes to this anticipated increase. However, the report suggests that businesses can mitigate these financial impacts through strategic early interventions and support, targeting health problems before they escalate.
By employing early intervention services such as vocational rehabilitation, businesses can potentially reduce the average length of long-term absences by 17%. In particular, conditions related to mental health see a larger impact, with possible reductions in absence duration by as much as 18%. This proactive approach can transform prolonged absences, exemplified by reducing an average seven-year absence by more than a year, or trimming a seven-month absence to six months.
Adrian Lewis, an absence management expert, points out the necessity for businesses to move away from traditional manual systems and adopt technology-enabled solutions. He notes that often, health issues aren’t identified early enough due to reliance on rudimentary record-keeping methods like payroll systems. Lewis advocates for systems that allow early detection of challenges at the managerial level, thus facilitating targeted wellness initiatives and support to employees at risk.
Financial mechanisms such as Group Income Protection (GIP) plans offer a viable solution for businesses to counteract the expenses associated with long-term sickness. The Cebr study illustrates that employers can receive £61 for every £100 invested in GIP premiums, and usage of early intervention services embedded within these plans can boost returns to £66 for every £100. This equates to an additional £270 million benefit to UK businesses, providing a financial incentive to adopt such plans.
Peter O’Donnell, CEO of Unum, underscores the prevalence of long-term sickness among the UK workforce, with 1 in 10 workers facing absences exceeding six months due to illness or injury. He advocates for GIP plans, which not only safeguard employees financially but also facilitate early intervention in health issues, thereby enhancing employee well-being and organisational efficiency. The dual benefit of a healthier workforce and cost savings presents a compelling case for businesses to invest in these protective measures.
In conclusion, addressing long-term sickness absence through early intervention and financial protection strategies is vital for enhancing business sustainability and employee health.
