With long-term ill health at record levels, the UK now has a ‘sick note economy’ that is costing billions. Gethin Nadin looks at the role employers have in prevention.
For several years the UK has been skirting a recession which has led to many organisations curbing spending or limiting losses. The advice many economists are giving to employers this year is to navigate 2024 with the same care.
In a year that may see organisations spending far more wisely and infrequently, it seems the perfect opportunity to get a proper grip on something that has been the source of unnecessary expenditure for years – the huge cost of employee sickness.
Since 2020, the number of days lost to sickness absence in the UK has been steadily rising and is now back to a high not seen in 10 years. The average Brit now takes almost 8 days off on sick leave every year.
Economic inactivity due to long-term ill health has now also reached a record high. At the time of writing, there are just short of 3 million people off work due to chronic illness and long-term sickness, according to the Office for National Statistics (ONS). To put that in context, that means around 5% of the entire country is now on long-term sick leave.
UK’s sick note economy
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While many point to the pandemic as the culprit behind these figures, it is not the only reason for this dramatic rise in sickness. ONS data shows an upward trajectory since before 2020 – and the most significant increases in ill health are across mental health (particularly among young people) and musculoskeletal issues.
UK ‘sick note’ economy
One of the main reasons why the UK economy has not been doing as well as others is the sick note economy we find ourselves in. It is costing the country billions.
This is a big concern for employers because unwell employees are less productive, less innovative and less likely to provide a high standard of customer service. And employees who are signed-off work leave gaps that can be difficult to cover.
This is not just about reducing the costs associated with employee absence, this is about solving a crisis so that we maximise our organisational output. Making a difference to employee wellness and reducing absence for just a small number of employees could make a material difference to organisations in 2024.
Cost of sickness absenceÂ
For a 1,000-person employer from any sector, the absence costs alone now sit at around £2 million a year, according to GoodShape. Since 2019, the cost of absence for employers has increased by almost 50%. For some industries, this figure is even higher – for example, for the hospitality sector, costs have increased by almost 500%.
Despite the significant rise in both short- and long-term absences, there has been little to no change in employers’ wellbeing budgets which, along with senior management buy-in, remain blockers to investing in employee wellbeing, research by SimplyHealth and the CIPD found.
One of the reasons why the UK is suffering from such high levels of sickness is that we have not done anything to stop it. Because employers tend to focus almost entirely on those employees at the point of crisis, we have missed significant opportunities to intervene and improve the wellbeing of the majority.
Preventative measures will be increasingly important in the year ahead. By supporting employees before they reach a crisis point, we can help them to improve their wellbeing and keep them at work.
Because employers tend to focus almost entirely on those employees at the point of crisis, we have missed significant opportunities to intervene and improve the wellbeing of the majority.”
Preventative measures
Less than half of UK employers say they have the tools in place to promote and support wellbeing in the workplace. Just 23% offer health insurance to their employees, according to Simplyhealth, and even fewer offer preventative benefits like income protection, critical illness cover, and health cash plans.
Despite this, employers seem to be aware of the huge opportunities that investing in employee wellbeing can bring.
Seventy per cent say they see health and wellbeing activity as an opportunity to boost employee engagement, and more than half say they see how investments in employee wellbeing will boost their retention and employer brand.
With less than 30% of non-work factors contributing to ill health, it is clear that the workplace is a major part of the solution. Investing in more preventative measures will ensure that employers are maximising their revenue-generating abilities while also reducing their losses.
The current cost of absence in the UK is equivalent to 5% of our GDP. If we want to grow our economy and our businesses this year, improving employee wellbeing must be a priority.
This does not have to be a situation that we simply accept. In 2024 I would like to see more organisations make two very definitive decisions:
- Offer insurance benefits designed to support early intervention, such as private medical insurance, health cash plans and income protection.
Two in 10 employers now plan to offer health insurance to their employees for the first time as NHS waiting lists soar, according to the Independent Health Providers Network. Health insurance has been found to reduce the number of employee sick days, while positively impacting productivity. My conversations with the government in late 2023 mirror those in the HM Treasury consultation on expanding the existing Benefit In Kind exemption for medical benefits, which include health insurance. I believe this year will see record numbers of health insurance policies, in many cases driven by employers.
- Offer a low-intensity digital wellbeing platform designed to help employees manage stress and improve their mental health.
These types of employer-sponsored mental health platforms result in as much as 25% fewer missed work days. One review of hundreds of studies found digital wellbeing interventions can significantly reduce the impact of poor mental health and subsequently absence rates.
It is untenable for organisations to continue to live with the current levels of absence in the UK. The costs of this sick note economy are significant and avoidable.
I have crunched the data from 200 studies covering 1.3 million employees and almost 600 employers, and estimate that investing in initiatives like better benefits and wellbeing support bring a financial return of three times the initial investment.
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In 2024, employers must invest in more ways to ensure their people can manage their wellbeing. Organisations must support their people to take a preventative, proactive approach to mental ill health so that we stop the upward sickness trend that is costing us so much.
