The Cebr’s report highlights the staggering cost of long-term sickness on UK businesses, emphasizing the need for early intervention.
- Long-term sickness absence costs the UK private sector £4.17 billion annually, with mental illness being a significant contributor.
- The cost of these absences has risen from £3.13 billion in 2012 and is projected to reach £4.81 billion by 2030.
- Businesses are urged to adopt early intervention services to mitigate these costs, reducing absence duration significantly.
- Investing in Group Income Protection (GIP) plans can offer financial returns through cost avoidance and early intervention benefits.
The latest report by the Centre for Economics and Business Research (Cebr) reveals that long-term sickness absence, defined as absences lasting six months or more, costs UK private sector businesses a staggering £4.17 billion annually. This financial strain is exacerbated by mental health issues, accounting for £1.17 billion of the total cost. The rising prevalence of mental illness, with one in four individuals affected in their lifetime, leads to over 70 million lost working days each year.
This growing financial burden has seen an increase from £3.13 billion in 2012 and is expected to reach £4.81 billion by 2030. The changing workforce composition, with an increasing number of older workers, further complicates the issue. However, the report outlines strategies that businesses can implement to curb these escalating costs. Early intervention is critical, as initial support at the onset of health issues reduces the duration and costs associated with long-term absences.
The data illustrates a significant reduction in the average length of absences—17% overall—when early intervention services like vocational rehabilitation are utilized. Conditions related to mental health see an even more considerable impact, with an 18% reduction, translating into a potential reduction of more than a year from an average seven-year absence. This proactive approach also has the benefit of transforming a seven-month absence into a six-month one.
Adrian Lewis of Activ Absence points out that most businesses rely on manual absence management systems, primarily recording the data remotely through payroll systems. Such methods often overlook the early signs of health issues, losing opportunities for timely intervention. Lewis notes a positive shift, with more businesses seeking to leverage technology to identify and support employees early. Well-designed systems enable targeted wellness initiatives and individual support as soon as problems are identified.
Financial solutions further support this approach. Group Income Protection (GIP) offers a financial backbone for employees facing long-term illness or injury, providing a significant return on investment for employers. For every £100 spent on GIP premiums, employers can receive £61 back by circumventing Occupational Sick Pay (OSP) and associated costs. Leveraging the early intervention services included in GIP packages can boost this return by 10%, adding up to an extra £270 million to UK businesses.
Peter O’Donnell, CEO of Unum, stresses the pervasive nature of long-term sickness absence in the UK workforce. With one in ten employees likely to face prolonged absence during their career, the average length spanning up to seven years, it poses a substantial threat to businesses, particularly smaller ones with fewer resources. O’Donnell advocates for a strategic investment in GIP plans with integrated early intervention services to manage these challenges effectively.
Addressing long-term sickness through early intervention and strategic insurance plans is essential for business resilience.
