Supplementary costs of lost labour run to €2 billion a month

"Sickness absenteeism, presenteeism, work disability pensions and health care cost the Finnish economy about €2 billion a month. Employers carry the major burden, but employees and public finances also shoulder their share of the costs," says Mikko Rissanen, Senior Officer at the MSAH's Department for Occupational Safety and Health.

A report issued by this department, titled the Cost of Lost Labour Input, examines the price of lost work both from the viewpoint of the country's economy and the individual workplace.

"Figures in the billions are not easy to comprehend, for instance when we consider a company of ten employees. We get a better idea when we count costs per employee. Calculating this way also probably gets us thinking about cost prevention."

Sickness absenteeism or presenteeism costs employers €1 590Undone work due to sickness absenteeism accounts for €3.4 billion a year and runs up about 20 million days of sick leave. With over 2.1 million wage earners, this works out at € 1 590 per person. Each day of sick leave costs on average €150.

Presenteeism, or working while sick, somewhat surprisingly incurs as sizeable a cost item as absenteeism. International studies show that presenteeism is as prevalent as absenteeism. When illness hinders your job performance or prevents it altogether, the work goes undone regardless of whether you are present in the workplace or not.

"The main disease groups that adversely affect work are depression and severe pain associated with rheumatic and musculoskeletal diseases," explains Rissanen.

Work disability pensions account for lost work to the tune €8 billion, or 181 000 person-years. This, says Rissanen, is both a social and individual economic problem.

"Because of population ageing and the increasing shortfall of labour it would be important get as many people as possible able to manage and continue until retirement. For employees, a long working life is, in turn, a question of income, as illness often precedes the low work disability pension or a drop in income due to unemployment."

The direct and indirect costs of workplace accidents are, according to the report, from €2 - €2.5 billion a year, while occupational diseases cost a further €97 million. The health care costs of the working age population are some €7.9 billion a year, not counting prevention work. These are included because the costs may, indirectly at least, have an impact on workplace activity. When all the sums are added together, the total is over €24 billion.

The issue of lost labour input primarily due to occupational health and safety shortcomings and resulting absenteeism and presenteeism is also a major concern at EU level.

According to Eurostat figures published in 2010, in the EU-27 in 2007, 5 580 accidents at the workplace resulted in death, and 2.9 % of the workforce had an accident at work that resulted in more than three days of absence from work. About 23 million people had a health problem caused or made worse by work in a 12-month period.

Small and medium-sized enterprises can be vulnerable to occupational hazards, because of their limited resources for protecting employees). In addition, prevalence rates among European workers indicate that in 2007 a total of 23 million workers or 8.6 % of the workforce (aged between 15 and 64 years) suffered from work-related health problems. The health problems most often reported in 2007 were musculoskeletal disorders, stress, depression and anxiety, according to Eurostat.

Measuring the costs of this lost labour input involves a multi-layered approach. This includes costs relating to productivity, health care, quality of life, administration and insurance. The estimation of which involves a complex methodology, recently described by the report titled Estimating the Costs of Accidents and Ill Health at Work, published by the European Agency for Safety and Health at Work.

Need for action on working capacityRissanen says that one of the aims of the report is to stimulate discussions in the workplace on ways to promote work ability. But he points out that problems related to employees' health could not be tackled purely by workplace efforts.

"Work ability is affected by many things, starting with hereditary and lifestyle factors. The potential influence of working life is therefore limited, and linked to the wider environment. Workplaces cannot influence such things as health care treatment chains, which on the other hand are highly important in terms of the duration of sick leave."

The need to prolong working life and make production more efficient have long been known, and much has been achieved in these areas. The retirement age has risen and the ratio of businesses' lost work ability to their wage sum has decreased.

Results aside, workplaces also need new operational models. Rissanen gives the example of a project run by the company Pipelife Finland in which all the staff have had a hand in developing working methods and tools to make their jobs easier and to increase safety. The company has invested in the idea that it is people themselves who make their work more rational. The company has received awards for its environment as a workplace and listener to its employees.

Rissanen points out that Pipelife Finland's project has involved the whole company, demonstrating that such initiatives do not have to be top-down efforts.

Lowest common denominatorThe price of undone work, or lost labour input, can be calculated in various ways, which is why we find that in press coverage of it there are different price tags. The sums presented in the report of the MSAH Department for Occupational Safety and Health represent, in Rissanen's view, minimum cost estimates.

"For instance, with sickness absenteeism we included only the auxiliary expenses of the wage sum, and did not address remaining value-added work. The bases for the calculations were national data from the Social Insurance Institution of Finland, Statistics Finland and insurance institutions, and the conclusions were not based on samples. Even indirect expenses were estimated using a strong evidence base."

Rissanen says that the authors of the report sought the smallest common denominators for calculating costs that would be acceptable to all.

"When there's a consensus on calculation criteria, it will actually be easier to move forward in the future."


Text: Paula Mannonen & Mark Waller