Sickness absence is probably costing UK organisations a lot more than they realise, with employers consistently underestimating the real price they are having to pay.A recent study highlights the hidden monetary and human costs of the problem, by Peter Dewis and Stephen Bevan
This article describes the results of a study, commissioned by UnumProvident and undertaken by the Institute for Employment Studies, which investigated the full costs of sickness absence to UK employers.
Employers are becoming increasingly aware of the issue of sickness absence in the workforce. This is for a number of reasons, including an increasingly explicit 'duty of care' towards their employees, competitive pressure that causes them to try to maximise productivity and a diverse workforce. More particularly, employers are becoming increasingly aware of the costs arising from sickness absence. For example, the most recent CBI survey - Counting the Costs, 2002 Absence and Labour Turnover Survey, estimates that sickness absence costs employers £476 per employee per year and that the annual cost to the UK economy is £11.8bn.
Most of the published data on costs concentrates on the direct salary costs of absent employees. Some earlier research sponsored by UNUM in the USA has suggested that the total costs of sickness absence are much higher than these direct costs. It is also clear that little is known about the factors that determine these costs and how they might be controlled. Consequently, in August 2000, the Institute of Employment Studies was commissioned to conduct an in-depth analysis of the total costs of sickness absence in a sample of UK employers.
The first step for the IES was to develop a robust spreadsheet-based tool to collect absence data. More details of this can be obtained from IES Report 3821. Data were collected under a number of headings:
- Employee staff group - including average annual full-time equivalents, headcount, gender, age groups, absences by number of days, number of incidences and duration
- Direct costs - including salary costs, employers' NIC contributions, pension contributions, bonus payments and contracted overtime
- Indirect costs - focusing on the costs of replacing absent workers
- Absence management costs - including line management time, human resource department time, tr