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The Costs and Causes of Absenteeism in the Workplace

Sourced from Mercer


For the majority of Canadian businesses, the question isn’t whether or not mental health and disability-related issues are costing them time and productivity, but rather how much is lost.


Healthcare expenses continue to consume a larger portion of benefit budgets for many firms, forcing some to reduce expenditures, split costs with staff, and outsource specific services. However, there is another aspect of the healthcare crisis that is less well-known: mental health. This issue is costing Canadian businesses billions of dollars in missed productivity, talent management fees, and payroll charges.


The Canadian Institute for Health Information estimates that the country’s healthcare spending in 2016 was close to $228 billion. An estimated $68.4 billion, or 30%, came from private sources, which include people and companies. This number is increasing dramatically every year, most lately as a result of the rapidly rising expense of pharmaceuticals, especially specialized medications.


However, the significant expense of absenteeism surfaces due to mental health problems brought on by stress, disability, and financial worries. This expense is frequently disregarded, if not completely unknown to employers.


Because of mental health concerns, employees at Canadian companies are predicted to lose $16.6 billion in productivity annually due to absenteeism. Roughly 500,000 workers are kept from work each week due to issues with mental health. Stress is another major concern for employers, affecting 72% of all employees who wish their employers would provide them support.  Employers are faced with disability concerns as well, with psychological health problems being the number one cause of disability. Disability also costs the Canadian economy $20 billion every year.


Given that more employees are reporting higher levels of stress and other mental health issues, which are having a demonstrable effect on company, productivity, and talent retention, experts predict that this trend will only get worse. In fact, a 2017 Monster Canada study found that one in four workers had quit because of stress at work.


Since mental health disorders may cost businesses millions of dollars in lost productivity, stress, and disability, they are quickly rising to the top of the list of concerns for employers. This is the new and expanding hidden cost of healthcare and can be caused by, among other things, employees losing sleep over personal finances, company leaders fretting about rising benefit expenses, and fewer people doing more labour. However, businesses frequently fail to evaluate or account for the detrimental effects of absenteeism and disability until it is too late because these issues are more challenging to quantify, at least initially.

In the past, corporations could offer a few add-ons through supplemental insurance and leave the majority of physical healthcare issues to the provinces and territories. However, today’s employers are taking on a wider range of health care problems, from physical health to psychological, financial, and social (how society impacts the workplace), and prescription expenses (which are mostly funded by employers) are on the rise. Why? Since the most talented workers anticipate this.


According to Mercer’s Global Talent Trends report, the average Canadian worker worries about money for 13 hours a month, and 49% of workers in Canada want greater attention paid to health and wellness, and 55% want more flexible work schedules.


Plans for health and wellness are beneficial to the company as well. The International Foundation of Employee Benefit Plans conducted a study in 2017 and found that over 50% of the companies that offered wellness programs and tracked their effectiveness also reported higher rates of productivity, financial sustainability, and employee satisfaction, along with lower absenteeism. However, the majority of wellness programs lack focus and comprehensiveness and fail to sufficiently address the growing expenses associated with mental health.





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