Hidden costs of workplace sickness in UK rise to £100bn a year, report finds

The hidden cost of rising workplace sickness absence in the UK has risen to more than £100 billion a year, largely driven by lost productivity amid “staggering” levels of presenteeism, a report warns.

Analysis by the Institute for Public Policy Research (IPPR) has found that the cost of staff sickness has risen by £30 billion a year to £103 billion by 2023. In 2018, the annual bill was £73 billion, the research found.

Most of the cost increases to businesses (£25 billion) were due to lower productivity, with employees not fully functioning in the workplace due to illness, injury or other health condition. The remainder of the cost increase (£5 billion) was due to employees taking more sick days.

On average, workers are now losing the equivalent of 44 days of productivity due to illness, up from 35 days in 2018, the IPPR said. Employees are losing a further 6.7 days due to sick leave, up from 3.7 days in 2018, the report said.

UK workers are among the least likely to take sick days, especially compared with other OECD and European countries, experts say, and are more likely to turn up to work when they are ill.

The huge impact of presenteeism, where employees are unable to perform optimally and are more likely to make mistakes, is causing significant productivity losses, the IPPR found.

Dr Jamie O’Halloran, a senior research fellow at the IPPR, said: “Too often, British workers are pressured to work while sick when it is not appropriate – damaging their wellbeing and reducing productivity. This could be due to poor work culture, poor management, financial insecurity or simply a poor understanding of long-term conditions among British employers.

“Our demonstration of a ‘hidden’ productivity cost of working while sick should catalyse a change in approach. We should strive to ensure that the work we do is good for our health, that we have the time to recover when we need it, and to ensure that businesses both contribute to and benefit from public health. This would protect workers, increase profits and deliver growth.”

With the right support in a suitable job, people with certain health conditions can benefit from good work, the report says. But when they are forced to work despite being ill, workers lose out.

Presenteeism can delay their recovery, increase their risk of getting sicker later, and spread infectious diseases to others – all of which reduce productivity. This is bad for business and bad for staff, the IPPR concluded.

Tina Woods, founder and CEO of Business for Health, said: “The cost of employee sickness to businesses is staggering, particularly the loss of productivity for people who continue to work while off sick.”

Working despite ill health is more common among people from marginalised ethnic groups, those in lower-quality jobs and staff without formal qualifications. Black and Asian workers are twice as likely to work through illness compared with white British workers, the IPPR says.

The inquiry, the final interim report of the cross-party IPPR Committee on Health and Welfare, urges ministers to take tougher action against companies that harm health and to incentivise companies that improve the health of their workers.

Kieron Boyle, CEO of the Impact Investing Institute and IPPR Commissioner, said: “Businesses and investors are increasingly seeing health as an asset, not a cost. This report is a blueprint for their role in creating a healthy and prosperous economy for all.”

Last year, a separate report by the IPPR Committee on Health and Welfare concluded that long-term sickness, where people are out of work, had become a “serious financial threat” to the UK.

The report said the number of people out of the workforce due to illness had reached a record high of 2.6 million, and warned that “there is no path to prosperity for this country without addressing the wave of illness head-on.”

A recent study found that mental health training for line managers could save companies millions of pounds in lost sick days every year.

Organizations that offer managers training on mental well-being experience better customer service, higher employee retention and recruitment, and lower long-term absenteeism, according to a study published this month in the journal Plos One.

The findings showed that mental health training was linked to better business performance and can have “strategic business value for companies.”

Professor Holly Blake from the University of Nottingham, who led the research, said: “Mental health problems at work cost organisations a lot in terms of absenteeism and lost productivity.

“To our knowledge, this is the first study to show that training line managers in mental health is linked to better business performance. This is an important finding that strengthens the business case for why employers should invest in mental health in the workplace.”

Around one in six people in the UK experience mental health problems in the workplace, with 12.7% of all sick days attributed to mental health problems.