Isle of Man

The Cost of Wellbeing at Work – Good business practice or just another fad?

Wellbeing at work is a topic for much debate recently and has been brought into sharp focus by the pandemic.

Wellbeing can relate to all aspects of working life, from the quality and safety of the physical environment, to how workers feel about their work, their working environment, the climate at work and work organization.

In this article, we focus on mental wellbeing primarily.

Employers need to be aware of the good business reasons for providing an environment in which employees can experience positive wellbeing.

What is the size of the problem?

In the UK, the estimated total annual costs of absenteeism, presenteeism (attending work while ill, and so underperforming or being less productive) and labour turnover have increased by 25% since 2019, reaching an estimated annual total of £53-56 billion in 2020-21 (£43-46 billion in the private sector and £10 billion in the public sector). ¹

In 2017 – pre-COVID - mental health problems at work cost UK economy £34.9bn says the Centre for Mental Health. ²

How are costs incurred?

The largest part of the business cost is in the form of reduced productivity among people who are at work but unwell: or ‘presenteeism’. This costs businesses twice as much as sickness absence relating to poor mental health. The remainder of the cost relates to turnover – people leaving their jobs as a result of poor mental health.

What effect has the pandemic had?

A 2021 survey by Mind of over 40,000 staff working across 114 organisations taking part in our Workplace Wellbeing Index revealed that the mental health of two in five (41 per cent) employees had worsened during the pandemic. ³

During the pandemic, people may have experienced stress, anxiety regarding one’s own health, fear, sadness and loneliness. And mental health disorders, including anxiety and depression, may have worsened.

Several surveys show a major increase in the number of adults who reported symptoms of stress, anxiety, depression and insomnia during the pandemic, compared with surveys before the pandemic. Some people increased their use of alcohol or drugs, thinking that can help them cope with their fears about the pandemic. In reality, using these substances may have worsened that anxiety and depression.

Does investment by employers in wellbeing provide financial offsets or benefits?

Employers can invest in providing support to improve the mental wellbeing of employees through measures such as screening, training, promoting general awareness of mental health issues, and targeted interventions or personal therapy.

Deloitte found that the average return for employers from such measures is £5.3 for every £1 invested in 2022. ³

In the USA, research by the National Safety Council and National Opinion Research Center at the University of Chicago in 2021 found that for every $1 spent on employee wellbeing, the employer sees a $4 return. ⁴

Research carried out at the London School of Economics found that initial investment of £40,000 in such a mental health promotion programme in a large sized multinational company could potentially result in net savings of over £340,000 over a 12-month period. This would equate to a nine-fold annual return on investment from productivity gains and reduced absenteeism. ⁵

What are the effects of the cost of living crisis?

In many respects we are on the Island are luckier than those in the UK with near full employment. However, we are not free form poverty. Food banks, for example, provide a vital service to those on lower incomes even before the current spike in inflation and huge increases in the cost of energy.

The Government has announced the following measures:

“Further payments totalling £2.8 million are to be made this autumn to cushion those most vulnerable to the rising cost of living.

Around 3,500 households will benefit from an Energy Support Payment in October, which comes in addition to the payment already made in April this year.

Those who currently receive income support, income based jobseekers allowance or employed person’s allowance (EPA), who are responsible for housing costs will receive £300. The cost of this will be around £1 million.

The 6,000 families who receive Child Benefit will be automatically issued with an additional Family Support Payment during November of up to £300 for those with one child and with increased payments for larger families. The cost of this will be around £1.8 million.

The payments increase the Government’s cost of living support package to £9.1 million so far this year. The Chief Minister has announced that the Council of Ministers will hold an extraordinary meeting on Tuesday to determine what broader support can be offered to other groups of people and businesses affected by these unprecedented inflationary pressures. A meeting of all Tynwald Members will follow to consider options.

Treasury Minister Alex Allinson MHK said: “The Government is very aware of the growing concern many people and businesses have about the pressures from the rising cost of living. It is important that we target support where it is needed the most. These additional payments will help to protect those most vulnerable to financial pressures from the real risk of slipping into food and fuel poverty.

“Government recognises however that everyone is affected by the sharp increase in living costs, with a growing number of households and businesses feeling the pinch. It is likely that a broader package of support will be required and the Council of Ministers hope to be in the position to provide an update next week.”

The UK Government for its part has been criticised for failing to act decisively. Instead, it has chosen to wait until a new Prime Minister has been elected, notwithstanding the urgency of the crisis.

The inflationary pressures are also of concern to employers whose expenses have increased in some cases dramatically. Many companies, where they can, have actively taken a lead in supporting staff with one time support payments or in some cases generous pay awards.

It is important that all firms consider staff wellbeing when reviewing annual salaries. Some staff might be struggling to make ends meet. Worried about how they are going to pay the mortgage, electricity/gas bills and feed their family. Not all costs have filtered through but is it likely in the coming months many staples will increase in price.

Such concerns will have a detrimental effect on people’s wellbeing. Constant worrying about bills will adversely affect productivity, and morbidity rates will increase. Some people might even find themselves trapped in escalating debt.

We do not yet know what the scale of the problem of might be. Companies should ideally be paying staff the living wage where they can and supporting staff in other ways. Staff might be willing to participate in support forums where they can explore such options. Perhaps flexible working or working from home to reduce fuel bills could assist some.

One problem will in paying the living wage is in understanding exactly what it is. The government publish a report on the living wage, which they recalculate each year. It has recently been announced that there was an error in the calculation since its introduction in 2017. The Government have addressed and corrected that error, but of more concern is that they will not be recalculating the current cost of living, which was calculated before the current crisis.

It is key that in deciding on salaries businesses look at what is affordable to them, and what is realistic for staff. The only way to do is by holding frank discussions with both sides being open and honest.

Sources

1. Deloitte, UK 2022

https://www2.deloitte.com/uk/en/pages/consulting/articles/mental-health-and-employers-the-case-for-investment.html

2. Centre for Mental Health, UK, 2017

https://www.centreformentalhealth.org.uk/publications/mental-health-work-business-costs-ten-years

3. Deloitte / Mind, UK 2022

https://www2.deloitte.com/uk/en/pages/consulting/articles/mental-health-and-employers-the-case-for-investment.html

4. National Safety Council, National Opinion Research Center, USA, 2021

https://www.nsc.org/newsroom/new-mental-health-cost-calculator-demonstrates-why

5. Knapp M, McDaid D, Parsonage M (editors) (in press) Mental health promotion and mental illness prevention: The economic case. PSSRU, London School of Economics and Political Science.

6. Support of vulnerable

7. Living wage miscalculated by Manx government.

Related Links

Chartered Institute for Personnel and Development (CIPD)

https://www.cipd.co.uk/knowledge/culture/well-being/evidence-mental-wellbeing

National Institute for Health and Care Excellence (NICE)

https://www.nice.org.uk/guidance/ng212/chapter/Recommendations

The Isle of Man Living Wage Report 2022

2022-05-20-living-wage-report.pdf (gov.im)

Committee members:
Juan Moore (Chair), Emily Lightfoot, Justin Tipper, Adrian Corkill

Contact: juan.moore@manx.net

The committee would welcome ideas for the newsletter or CPD events. New members to the Committee are welcome. Please contact Juan for details of work the Committee undertakes.