A new report from the Centre for Economics and Business Research (Cebr)[1] estimates the cost of long-term sickness absence – absences of six months or more – at £4.17 billion to private sector businesses in the UK. And with an estimated 1 in 4 people now experiencing mental health problems at some point in their life – causing over 70 million working days to be lost each year – mental illness represents a significant proportion of this cost: some £1.17 billion a year.
The report, commissioned by employee benefits provider Unum, shows the cost of long-term sickness absence is a growing problem: increasing from £3.13 billion in 2012[2] and, as the make-up of the workforce changes and the number of older workers increases, it is set to reach £4.81 billion by 2030 – a 15% increase.
However, businesses can take measures to protect themselves from these costs. The research demonstrated that stepping in early to provide support at the first signs of a health problem, before it becomes more serious, reduced the duration and associated costs of long-term sickness absence. Actively using early intervention services such as vocational rehabilitation can reduce the average length of absence by 17% for all conditions, with those with mental health conditions seeing the biggest impact with a reduction of 18%. That means a reduction of more than a year (60 weeks) for the average long-term absence of seven years or turning an absence of seven months into six.
Crucially, the Cebr study shows that in monetary terms, early intervention services could contribute an additional £270 million worth of ‘payback’ to private sector businesses. Overall, through avoiding Occupational Sick Pay and other costs associated with sickness absence, Group Income Protection (GIP) and associated early intervention services can result in an estimated £3.95 billion being returned to businesses. This means that for every £100 an employer spends on a GIP policy, which provides a financial back-up plan for employees in case of long-term illness or injury, with actively-used early intervention services on offer[3], they get £66 back.
Peter O’Donnell, Chief Executive Officer, Unum said; “To avoid these preventable business costs, employers should implement a strategy which mitigates the impact of sickness absence. An effective way to do this is through early intervention services which help employers step in when employees show the first signs of having a health problem, and often come as part of a Group Income Protection package.
“Ensuring your employees are healthy and happy isn’t just the right thing to do – it also has a direct impact on the bottom line. Smart businesses should provide their employees with these early intervention services as part of a Group Income Protection plan and, more importantly, ensure that employees take advantage of the services on offer to them.”
[1] Cebr Report The benefits to business and the economy of early intervention and rehabilitation
Report for UNUM, October 2015
[2] Cebr 2012 study commissioned by Unum
[3] This ‘payback’ is derived from the percentage of the total spent on Group Income Protection premiums that is notionally returned to the business through avoided Occupational Sickness Pay and other indirect savings
Notes to Editors:
Benefits of Early Intervention report
This study estimates the annual cost of long-term sickness absence to the UK economy in 2014. This represents an update to Cebr’s previous 2012 study. In estimating the cost of long-term sickness absence, the study incorporates the cost burden faced by employers from a number of areas including occupational and statutory sick pay, absence management costs and the costs associated with staff recruitment and training replacement staff.
Cover depends on policy – conditions apply
Methodology
Cebr’s ‘The benefits to business and the economy of early intervention and rehabilitation’ report (October 2015), is an update of the 2012 Cebr report commissioned by Unum. ‘The benefits to private sector employers from the adoption of Group Income Protection as an employee non-salary benefit’.
The purpose of the original study was to quantify the GIP dividend: a ratio reflecting the percentage of funds invested by businesses in GIP premiums that can be expected to be returned to them through savings in a number of areas, such as avoiding occupational and statutory sick pay, absence management costs and the costs associated with staff retention.
The main purpose of the 2015 study was to re-estimate the GIP dividend based on the latest available data and to analyse how it can be expected to change under various assumptions about the availability and use of early intervention services (such as rehabilitation and other return-to-work services).
The model developed for this purpose is based on:
- The following national statistical datasets:
- The Department for Business, Innovation and Skills (BIS) “Business Population Estimates for the UK and Regions 2014”. This provides enterprise population, turnover and jobs disaggregated by enterprise size, by industry, including public and private sector and by regions.
- ONS’ Annual Survey of Hours and Earnings (ASHE) 2014, which provides data on the number of employees, median and mean weekly earnings broken down by each occupational class and industry sectors.
- ONS Blue Book, Annual Business Survey and supply-use tables to fill gaps in the other datasets, such as the lack of turnover data for the financial services industry in the BIS business population dataset.
- Assumptions developed from the literature (including other research carried out by or for Unum.
- Unum’s proprietary GIP claims data
The model produces estimates of the GIP dividend for private sector companies in each of three size bands representing small, medium and large-sized companies.
The analysis of the impact on the GIP dividend of vocational rehabilitation and early intervention services was conducted using Unum’s GIP claims data, by comparing absences for claimants who had actively used these services with absences for those who had not.
Based on Unum’s data, it was assumed that rehabilitation and early intervention services are made available to about 69% of employees covered by GIP schemes.
For more details please contact:
Emily Westcott
Emily.westcott@bluerubicon.com
02072602700
— OR —
Claire Lundie
02072602700
— OR —
Mandy Blanks
01306 873616
For more information please visit www.unum.co.uk.