Cost Of Workplace Absence Tops £13 Billion - New CBI Survey

14th May 2006

The cost of staff absence to the UK economy rose to over £13bn in 2005 - and 66 million days were lost across the public services at a cost of £3.4bn to the taxpayer - according to a new survey of over 400 organisations.

The latest annual CBI / AXA Absence Survey, published today (Monday 15 May 2006),
reveals that absence levels were 30 per cent higher across public sector organisations than in the private sector.

If the public sector reduced its absence to average private sector levels £1.1bn of taxpayers' money would be saved - enough to pay for nearly 60,000 extra nurses a year1.

The total number of days lost through absence across the UK economy fell in 2005 by 4 million to 164 million days. This is the lowest level since the survey began in 1987.

However, based on the current rate of change in the public sector - from 8.9 days in 2002 to 8.5 days in this year's survey - it would take 30 years for it to reduce its absence rates to the average 6 days lost per employee in the private sector.

The survey suggests that a 'culture of absenteeism' still exists in too many workplaces. As many as 13 per cent of days lost to sickness in 2005 were considered non-genuine by employers - in other words staff 'pulling sickies' - at a cost to the economy of £1.2bn.

Nearly three quarters (73%) of employers believed that unauthorised absence could be linked to Mondays and Fridays and almost two-thirds (64%) thought staff may be taking unauthorised extensions to holidays. Forty per cent considered special events, like the forthcoming World Cup, were a
likely cause of unwarranted absence.

A yawning gap of almost 9 days still remains between the best and worst performing organisations - and if the worst could raise their performance to the best, the overall cost of absence would fall by £5.4bn. The cost of absence, which includes covering salaries of absent staff, paying overtime and providing temporary cover, rose to £531 per employee in 2005 compared with £495 in last year's survey.

CBI Deputy Director-General, John Cridland said: "The huge cost of absence to the economy shows why so many CEOs declare that their people are their most important asset. Hard work by companies to manage absence is clearly paying off, with overall absence coming down. But so much more can still be done.

"Employers live in the real world and recognise that the majority of absence is due to genuine, minor illnesses. Nobody wants staff to drag themselves into work when they are genuinely ill. But there is clearly concern that a culture of absenteeism still exists in some workplaces and this must change.

"With excitement inevitably building towards this summer's World Cup, employers may well be worried that staff will grant themselves unauthorised days off to watch matches. We all want the England team to do well in the World Cup but many employers make arrangements for staff to catch the big matches in the workplace."

The survey consistently finds that organisations which recognise trade unions have higher rates of absence - 7.6 as opposed to 5.5 days. This is particularly true for the public sector and is irrespective of size: all but the very smallest unionised organisations have higher rates.

Recognising a union need not automatically be a barrier to reducing absence, however. Manufacturers that recognise unions have only 0.6 days higher absence than those that do not whereas organisations in the public sector with union recognition have absence 2.9 days higher than those without.

Since the survey began in 1987, the gap between absence levels among manual and non-manual workers has narrowed. The gap stood at 5 days in the early nineties and is now half that. But it is manual staff that have made all the gains while absence for non-manual employees has remained broadly static for a decade.

Absence levels are higher in manufacturing than in the service industries, although it is manufacturers that have successfully reduced numbers of lost days while service sector levels have not changed - days lost to manufacturing have fallen from 7 days in 2004 to 6.3 last year and services remained on 6 days.

There are wide variations between regions in absence levels. Yorkshire and Humberside lost the most days in 2005 (8.9 days per employee), followed by Wales (8.4 days), Southern England (7.7 days), the East Midlands (7.5) and the South West (7.2). Average levels of absence were recorded in Scotland (7.1), the South East (6.5), the West Midlands (6.4) and Northern England (6.2). The regions with the lowest levels of absence were the North West (6.0), Eastern England (5.8), Greater London (5.1) and Northern Ireland (4.7). No lasting links are usually found across the surveys between
absence and regions.

There is still a marked difference in rates of absence between large and small organisations. Larger ones, employing over 5,000 staff, averaged 7.4 days' absence per employee, whereas smaller ones with fewer than 50 employees averaged just 4.2 days.

The most likely reason for this difference is because more small firms put senior managers in charge of absence, and staff may have a greater awareness of its impact. For the first time in the survey though, HR managers were found to be the most effective at dealing with absence. Where they were in charge rather than line managers, nearly two fewer days were lost.

The survey reveals, however, that managers may not be using the most effective policies to manage absence. The policies that had the most impact were waiting a period of days before paying sick pay, offering bonuses for good attendance and providing early access to medical care through private medical insurance.

John Cridland continued: "Absence is best managed with both carrot and stick - schemes that reward the good attendees work best together with those that deter the worst offenders. In its drive to reform welfare and encourage more people on incapacity benefit back to work, the Government must not deny employers the opportunity to wait a couple of days before paying sick pay. Denying them this could increase short-term absence and add far more to employers' costs than it would save in administration.

"What businesses need to help with those on long-term absence is continued reform of the health service to ensure effective, timely treatment with better co-operation and support from GPs."

A third of overall time lost is attributable to longer periods of absence - over 20 days - and costs £4.8bn. But long-term absence is more of a problem in the public sector, where just 6 per cent of absentees accounted for over half of total time lost. Rehabilitation services, which include flexible working, counselling, training and treatment, are now offered by 84 per cent of organisations - up 24 percentage points on the previous year.

Dudley Lusted, AXA Head of Corporate Healthcare Development said: "Short-term absences caused by genuine illness should not pose a problem for those workplaces where employees are well motivated and are both encouraged and supported to give their best.

"Long term absence, on the other hand, is largely a medical issue and is dealt with best by early intervention and active management. Employers who provide early access to treatment experience significantly lower absence levels - 19 per cent and 13 per cent reductions for manual and non-manual workers respectively. So, it is encouraging that more organisations now offer rehabilitation. However, to be effective policies to help employees back to work must be must be well implemented. There's still much more
that employers could do especially in the public sector where, despite rehabilitation policies being more prevalent, long-term absence remains stubbornly high."