Cost of absent workers is almost nothing, claims Swansea University research

Workers pulling sickies are costing almost nothing to business, research from Swansea University has suggested.

The study from the university shows the cost of worker absenteeism to British industry could be as much as £13bn less than other surveys suggest.

The report, Pay, Technology, and the Cost of Worker Absence, has been put together by John Treble and his team in the School of Business and Economics.

The report has been published in US-based journal Economic Inquiry.

Earlier this year, a report by the CBI revealed the cost of sickness absence to UK employers had reached its highest-ever level. The annual study put the cost to the economy at more than £13bn.

But Professor Treble said: “There are two main reasons why we believe the cost of absence is lower than generally accepted. Firstly, not all businesses operate in the same way, which means that absenteeism may have more financial impact on some than on others.

“Secondly, the way in which we estimate the cost of absenteeism takes into account factors that the CBI survey does not. In effect, the CBI measure inflates absence costs by ignoring the extra expense that is incurred in reducing absenteeism.”

One of the key findings from the research shows that an absence in a business operating ‘just-in-time’ practices is significantly more costly than in other businesses. Such companies do not hold large quantities of semi-finished product and are, therefore, more likely to experience disruption to the flow of production caused by worker absences.

Companies that do not operate just-in-time techniques are less affected and, consequently, incur fewer costs associated with worker absence.

The report also argues that absences cannot be controlled without cost to the company. Most personnel managers invest a great deal of time and effort to minimise absenteeism, which has a cost implication to business. Treble argues that the CBI survey does not take this issue into account.

“It might be obvious to point out that personnel managers incur costs in trying to reduce worker absence, but the CBI survey does not take this aspect seriously,” he said.

“We believe that any estimate of the cost of absenteeism to industry must take into account how much it would have cost to have prevented the absences in the first place. Our estimates include the cost of prevention as well as the cost of lost production. It turns out that these two figures more or less cancel each other out, implying a net cost close to zero.”

Data suitable for implementing Treble’s technique is not available in the UK, so the team used economic data relating to the French workforce. The results show that absenteeism costs the French economy about £15.6m each year.

“I cannot imagine that French managers are much different from British managers in terms of how they manage absence,” said Treble.

“The net cost of absenteeism in Britain is, therefore, likely to be significantly lower than even the most conservative of the CBI’s estimates.”

Treble said he hoped to conduct research using British data in the near future.

The abstract of the research has a link to the full report.

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