The Cost Of Sickies In Australia

I previously blogged that some people are more committed to being sick than successful. Admittedly it is a provocative position to take – but read the article to fully grasp the perspective presented.

Sick leave costs small to medium sized businesses lost productivity and revenue each year has an impact on the economy overall but when employees are sick they do need to take time off. Implementing practices to help alleviate the effects of illness can assist businesses reduce the number of lost hours as well as financial impact on the business.

For the average Australian employee an increasingly busy life leads to longer hours and more demanding work, which can translate to increasing levels of stress and health problems, negatively affecting employees’ work attendance and productivity. That means more sick days that costs businesses money and make it more difficult to turn a profit in an ultra-competitive market.

The following statistics shows the impact on businesses as a result of ‘sickies’:

  1. In NSW, the average SME loses $26,536 in productivity a year due to sick leave. In Queensland it is $20,510, in Victoria the average loss is $16,406, in South Australia it is $15,612 and in Western Australia it is $5103.
  2. Direct Health Solutions (DHS), a nation leader in absence management, put the cost per sick day at $350; DHS’s 2016 Absence Management Survey found that on average employees took nine sick days per annum and that the total cost per employee was roughly $3,608.
  3. Since 2010, the rate of absenteeism across Australia has risen by 7%, while as much as 5% of the Australian workforce calls in sick on any given day. The annual cost to the Australian economy of lost productivity through absenteeism is a staggering $33 billion, with a total of 92 million working days being lost through unexpected absences.
  4. A large number of employers almost accept this level of absenteeism, rather than showing firm leadership and tackling the issue. As many as 3 out of 5 organisations do not record absences properly, with up to 25% of absences going unreported. A common theme across Australian workplaces is that of an ‘entitlement culture’, where employees view absenteeism as a right to take, rather than a privilege to fall back upon when needed.
  5. According to DHS, absenteeism costs the Australian economy more than $33 billion in wages and lost productivity every year. In 2016, absenteeism increased by 0.9 days to 9.5 days per employee, at an average cost of $3608.
  6. 92 million work days are lost in Australia per year. This lost accounts for 8% of payroll.
  7. Industries with the most absenteeism:
    • Travel, Tourism and hospitality – 11.9 days per year
    • Transport & Logistics – 11.6 days per year
    • Telecommunications & Utilities – 10 days per year
  8. Absence levels in banking, finance & insurance increased significantly to 9.7 days. The contact centre industry experienced a 14% reduction in absence levels, to 9.7 days per employee per annum, down from 11.6 days in 2015.
  9. More than 70% of absenteeism is as a result of “entitlement mentality”
  10. A survey, conducted by research agency RAND Europe, revealed Malaysian employees lose 67 days a year to absenteeism or presenteeism due to poor health and fitness (Presenteeism is when an employee works while sick, causing productivity loss, poor health, exhaustion and workplace epidemics). The average yearly cost of health-related absenteeism and presenteeism per organisation is estimated at RM2.7 million.
  11. According to the 2017 Absence Management and Wellbeing Survey, conducted by Direct Health Solutions, employees in the private sector took an average of 9.5 days sick leave, while public sector workers took a considerably higher average of 11.4 days leave. Some 40 per cent of organisations said they experienced an increase in workplace absences in 2017, while a third (33 per cent) said levels had remained steady.
  12. When organisations take into account the indirect costs of absenteeism, such as replacement labour, lost productivity and increased risk, absenteeism can cost organisations up to 8% of total payroll costs.
  13. The cost of absenteeism to businesses also includes:
    • •    Loss of production
    • •    Increased production costs
    • •    Increased workloads
    • •    Low moral
    • •    Increase in overtime costs
    • •    Frustrated managers
    • •    Poor product quality
    • •    Increased management and supervision costs and stress
    • •    Adverse opinions held by customers
  14. According to PwC UK workers took 9.1 days of unscheduled absence over the past year, Canadian employees took 9.1 days, up from 8 days in the previous year, Irish workers took 6.4 days of unscheduled leave, and US employees used 4.9 days. In Asia, the average number was a comparatively miniscule 2.2 days, while in New Zealand, workers took just 4.5 days.
  15. In Australia, the high rate of absenteeism led to 88 million working days being lost to the national economy at a cost of $33 billion in sick leave costs and lost productivity. The cost to British businesses was even higher: they are losing £32 billion per annum – that’s the equivalent of almost AU$70bn. In the US, it’s estimated that the direct cost of total paid time off as a percentage of payroll stands at 8.1%.
  16. Studies indicate that indirect costs reflect co-workers are 29.5% less productive when covering for unplanned absence days. An overwhelming 90% of respondents indicated that unplanned absences added to the workload. With 61% saying that this increased stress, while almost half said it hurt workplace morale. Two in five said that covering for others reduced the quality of their work.
  17. A report, led by Monash Professor Alex Collie, shows that 786,000 workers accessed income support from a private or government source in the 2015/16 financial year, in addition to at least 6.5 million workers who used sick leave. The total direct costs amounted to $37.2 billion for the year.
  18. The Australian HR Institute (AHRI) conducted a survey in 2016 which found that while 80% of respondents believe absence levels in their workplace could be reduced, 79% said their workplace did not record the cost of absence.
  19. On average, Australian employees take 8.8 unscheduled days off per year. This costs employers approximately $578 per employee per absent day, with the annual cost of absenteeism to the Australian economy an estimated $44 billion per year.
  20. 87% of employers believe that at least one employee will call in sick after a major sporting event.
  21. Employees reasons for absences:
    • Minor illness – 93%
    • Family/carers duties – 76%
    • Recurring illness – 30%
    • Mental issues – 21%
    • Alcohol/drug related – 5%
  22. In the UK workplace absence costs businesses an estimated £29 billion each year, the average worker takes 6.6 sick days and the approximate cost per employee is £550 each year.
  23. The Centers for Disease Control and Prevention (CDC) reports that productivity losses linked to absenteeism cost employers $225.8 billion annually in the United States, or $1,685 per employee.
  24. According to the Harvard Business Review, more employees are working when they are sick, costing employers about $150 billion to $250 billion or 60 percent of the total cost of worker illness. Additionally, chronic diseases, a rapidly-aging workforce and factors like stress, fatigue and depression all affect employers’ revenue.
  25. The Gallup-Sharecare Well-Being Index conducted a survey of 94,000 workers across 14 major occupations in the U.S. Of the 77% of workers who fit the survey’s definition of having a chronic health condition (asthma, cancer, depression, diabetes, heart attack, high blood pressure, high cholesterol or obesity), the total annual costs related to lost productivity totaled $84 billion. According to the survey, the annual costs associated with absenteeism vary by industry, with the greatest loss occurring in professional occupations.
  26. Annual cost of lost productivity by major U.S. occupations (in billions):
  • Managers/executives               $15.7
  • Service workers                         $8.5
  • Clerical/office                            $8.1
  • Sales                                            $6.8
  • School teachers (K-12)            $5.6
  • Nurses                                        $3.6
  • Transportation                         $3.5
  • Manufacturing/production    $2.8
  • Business owners                       $2.0
  • Installation/repair                    $1.5
  • Construction/mining               $1.3
  • Physicians                                   $0.25
  • Farmers/foresters/fishers       $0.16


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