Every year 140 million working days are lost to sickness absence, much of which ends in a swift return to work. However, a significant number of absences last longer than they need to and each year over 300,000 people fall out of work onto health-related state benefits. Before reaching this point, many have been long-term sick off work. They have become increasingly distanced from the labour market and suffer from the reduced economic, social and health status that come with being out of work. We know that the longer someone is off sick or out of work, the harder it is to get back to work, and worklessness comes at great personal and financial cost. Much absence and inactivity is due to comparatively mild illness which is compatible with work – and may indeed be improved by work.
This Review has been carried out to stop as many people as possible from needlessly moving away from work because of ill health, and to find ways of improving the coherence, effectiveness and cost of the existing system for managing sickness absence. We have been motivated, first and foremost, by the financial and social loss to those suffering ill health. There are also major gains to be made for employers, who pay sick pay and associated costs of £9 billion a year and for the State, which spends £13 billion annually on health-related benefits.
As requested by the Government, we have taken a hard look at the whole system to assess its performance and highlight any market failures or problems of unaligned incentives. The costs of sickness absence are shared between employers, individuals and the State, and all three make decisions based on a number of incentives that create the current set of outcomes and costs. Figure 1 illustrates the key stages along the sickness absence journey from employment through to eventual state benefit claim, by those who leave work.
For employees, the costs of sickness absence fall on individuals, who often bear the personal and financial costs of absence, and employers, who are responsible for sick pay. For those who fall out of work due to ill health, the State bears much of the cost, and individuals and their families suffer through loss of income as well as the illness itself.
Sickness absence and its costs are greater in the public sector than the private sector. There are, however, some excellent examples of low sickness absence in the public sector, invariably associated with good management practices.
Stress and mental health disorders are one of the biggest causes of long-term absence and, according to a number of business surveys, are on the increase as a reason for absence. It is estimated that each year one in six workers in England and Wales is affected by anxiety, depression and unmanageable stress44.
‘Stress’ itself has become a major issue in the workplace. The fact is that excessive pressure – driven by workplace or other external factors – can lead to stress. This can then become harmful and lead to other mental health issues such as anxiety or depression.