Absenteeism, Presenteeism and the Cost to Australian Businesses
No document explains the cost of mental ill-health on business productivity better than Medibank's Sick at Work: The cost of presenteeism to your business and the economy, July 2011. This research paper draws on the results from Economic Modelling of the Cost of Presenteeism in Australia: 2011 Update (Medibank, KPMG Econtech*) also published in July 2011. To obtain a full copy of the report from Medibank, please contact firstname.lastname@example.org or 03 8622 6388.
Presenteeism is defined in these papers as "The productivity that is lost when employees come to work but, as a consequence of illness or other medical conditions, are not fully productive. The direct impacts of presenteeism are the direct costs faced by employers due to the on-the-job productivity losses caused by presenteeism. Illness affects both the quantity of work (e.g. people might work more slowly than usual or have to repeat tasks) and the quality (e.g. they might make more mistakes) of work that can be done by employees. The lower labor productivity of employees affected by illness translates into increased costs or foregone earnings for employers. Previous research undertaken in the United States shows that presenteeism can decrease individual productivity by one-third or more." Presenteeism is harder to identify and quantify than absenteeism and the cost of presenteeism to businesses and the economy is estimated to be three to four times greater.
The key findings of an earlier 2007 Econtech report on presenteeism
considered to be a world first and leading piece of research in terms of
calculating the cost of behavioral health in the work place on an economy, included:
The 2011 KPMG Econtech report estimated the overall cost of presenteeism to the Australian economy in 2009/10 was $34.1 billion. Add to that the cost of absenteeism then the costs are well over $40 billion per annum.
Medical Conditions Associated with Presenteeism
Contribution of Medical Conditions to Overall Productivity LossSource: KPMG Econtech
Note: Percentages refer to the contribution that each medical condition makes to the overall productivity loss of 2.6% in 2009-10.
Time to Take Action
The KPMG Econtech study concludes by recommending it is time to take action and that "Companies can take steps to address presenteeism and improve their employees’ productivity:
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*KPMG Econtech is one of Australia’s leading independent economic consultancies, with an emphasis on economic modeling. Specialising in consulting on taxation, policy and forecasting, as well as forecasting reports and software, Econtech works with government organizations, industry bodies and corporations in Australia and overseas.