Poor mental health costing businesses £45bn a year, report finds

Firms need to show ‘visible commitment’ to supporting staff, as research reveals productivity lost to presenteeism is four times greater than to absences

Poor mental health costs UK employers up to £45bn a year, new research has found, with presenteeism taking a bigger toll than absences.

A report from Deloitte and mental health charity Mind estimated that presenteeism – defined by the research as staff turning up to work despite being unwell for mental health reasons – cost UK employers between £26bn and £29bn annually through lost productivity.

This was around four times the cost associated with absences owing to mental ill-health, and about three times that associated with mental health-related staff turnover, estimated at £6.8bn and £8.6bn respectively.

The report found these costs had increased 16 per cent since Deloitte’s previous analysis in 2016. It estimated that mental health-associated costs to employers were between £33bn and £42bn in 2016.

Elizabeth Hampson, the report’s author and director at Deloitte, said changes to working practices had created challenges for staff mental health. “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,” she said.

Young people were found to be the group most heavily affected. Employers lost the equivalent of 8.3 per cent of the salaries of workers aged 18-29 through costs associated with poor mental health, the highest percentage of any age group. The proportion of wages lost decreased among older employees, reducing to 6.6 per cent for workers aged 30-39, and just 2.6 per cent for staff aged over 60.

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Paul Farmer, chief executive of Mind, said it was important for employers to create a culture where staff felt able to take time off when unwell. “The government must also play its 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 staff receive when they’re off sick,” he said.

Pressure from targets and competing workplace priorities was the most significant cause of poor mental health at work, the report said, pointing to an earlier survey that found 52 per cent of workers cited this. 

The research also found investment in staff mental health paid dividends. Organisations on average saw a £5 return, through a reduction in presenteeism, for every £1 spent on supporting employees’ mental health.

Rachel Suff, senior employment relations adviser at the CIPD, said the report shone a light on the costs to employers if they failed to take action. “There’s been important progress on building more mentally healthy organisations, but we need more proactive interventions that help prevent poor mental health in the first place,” she said.

Suff suggested firms carry out stress risk assessments, and train managers to have sensitive conversations with workers and help them access effective support. “Senior leaders need to lead on this agenda as well as HR, and show their visible commitment,” she said.

The research also reported positive changes in the workplace, however, with employers now offering more support to staff and increased openness compared to 2016.

Rebecca George, vice chair and UK public sector leader at Deloitte, said expectations over how employers should support staff were evolving. “Early intervention is vital – for those experiencing poor mental health and employers alike,” she said.

“Smart, forward-thinking employers are investing in staff wellbeing,” added Farmer. “And those who do tend to save money in the long run.”