Poor mental health costs UK employers £45bn a year

Organisations need to change their corporate culture and improve their understanding of mental health issues to support employees and reduce the damaging impact of the always-on work culture

Costs are spiralling as work pressures and changing work patterns add to the toll on workers’ wellbeing, with a growth in the use of short-term contracts and the negative impact of ‘leavism’, where employees never switch off and feel constantly on call, even if not officially, with 24/7 email and mobile access, contributing to burnout. Presenteeism is another problem where employees work through illness, despite poor health and underperform.

Analysis by Deloitte found that poor mental health costs UK employers up to £45bn a year and this figure has risen 16% since 2016, costing an extra £6bn a year.

This is made up of absence costs of around £7bn, presenteeism costs ranging from about £27bn to £29bn and turnover costs of around £9bn.

With a sixth of workers experiencing a mental health problem at any one time and stress, anxiety and depression thought to be responsible for almost half of working days lost in the UK due to health issues, the relationship between mental health and the workplace is a complex one.

Across industries, the highest annual costs of mental health per employee are in the finance, insurance and real estate industries (£3,300) and on average public sector costs per employee are slightly higher than private sector costs (£1,716 compared to £1,652).

The top three factors causing mental health symptoms at work were identified as the pressure of trying to deal with too many priorities and targets, heavy workload forcing longer working hours, overtime and inability to take annual leave, and a lack of management support in role, according to research by Business in the Community (BITC).

The Deloitte report, Mental health and employers: the case for refreshing investment, also looked at how employers can tackle the problem. It recommends early interventions, such as organisation-wide culture change and education, rather than holding back and leaving employees to fend for themselves, so that more in-depth support may be needed at a later stage when a person is struggling.

On average, for every £1 spent on supporting their people’s mental health, employers get £5 back on their investment in reduced presenteeism, absenteeism and staff turnover.

Rebecca George OBE, Deloitte vice chair and UK public sector leader said: ‘As our ways of working evolve, so do expectations of employers about how we should support our people.

‘This analysis shows very clearly that it pays for employers to provide mental health support at work and that early intervention is vital, for those experiencing poor mental health and employers alike.”

Costs driven largely by ‘presenteeism’

The latest research builds on work conducted by Deloitte in 2017 for the Stevenson-Farmer Review on workplace mental health, which calculated that poor mental health cost UK employers £33bn-42bn a year.

Since then, there have been some positive changes in workplaces, including greater openness in discussing mental health at work in larger employers in particular and more provision of support overall.

However, the Deloitte research also found that despite this progress, costs continue to climb. This can be attributed largely to a significant rise in mental-health-related ‘presenteeism’, where employees work when they are not at their most productive. Mental-health related absenteeism and staff turnover have also contributed to the costs overall.

‘Always-on’ culture impacts mental health

The analysis describes a complex picture, in which more people with poor mental health are continuing to work when they are not at their most productive, rather than take time off, highlighting leave-ism and presenteeism as characteristics of an ‘always-on’ culture, enabled by technology.

Elizabeth Hampson, Deloitte director and author of the report, said: ‘Understanding more about the relationship between mental health and work is in all of our interests.

‘While an increased use of technology can enhance working practices, having the ability to work outside of normal working hours can add to the challenge of maintaining good mental health, and make it hard for some to disconnect from an ‘always-on’ culture.’

It is important to support managers so that they can deal with issues in their teams. Training staff to spot signs of leaveism (working late at night or early in the morning, and sending emails while on holiday), and ensuring that line managers are trained to manage the workloads of team members and set reasonable expectations, factoring in individual working styles, is important.

Ways of redistributing work during busy periods or when staff are overstretched should also be standard practice, with policies in place to allow this to happen easily.

Young people

The report also highlights recent studies which find higher prevalence of mental health problems among younger people, who emerge as the most vulnerable demographic in the workplace to poor mental health.

It finds that employers lose the equivalent of 8.3% of the salaries of those aged 18-29 as a result of poor mental health - the highest of any employee age group. Young people are also less likely to disclose mental health problems to employers and more likely to use their holiday instead of taking days off work.

Paul Farmer, chief executive of Mind, said: ‘Smart, forward-thinking employers are investing in staff wellbeing, and those who do tend to save money in the long run. This report shows the link between prioritising staff wellbeing and improved loyalty and productivity; and decreased sickness absence and resignations. However, it also shows a rise in “presenteeism” – unwell staff spending unproductive hours at work rather than taking time off.

‘As presenteeism costs three times more than sick leave, we need to look at supporting employers to change the culture so their staff feel able to take time off when they are unwell.

‘The government must also play their part by improving the definition of disability under the Equality Act, so more people with mental health problems can benefit from its rights and protections, as well as increasing the amount of Statutory Sick Pay (SSP) staff receive when they’re off sick.

‘Employers can access resources to help prevent poor mental health and promote wellbeing through the Mental Health at Work Commitment.’

Deloitte report, Mental health and employers: the case for refreshing investment

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