The Centre for Economic and Business Research (Cebr) has carried out a unique research project looking at the costs incurred for long-term sick absence. The average UK business could be spending £620,000 a year, which would amount to an astonishing £3.1bn every year for all UK businesses combined.
Commissioned by Unum, the Cebr research looked at the impact to the economy of sick absence lasting for six months or more.
The research showed that Group Income Protection (visit guide) can be a benefit which enables companies to control these costs during difficult times.
Cebr produced figures showing for every £100 an employer spends on group income protection the saving in a form of “pay back” could average £48.
They arrived at this amount when they took into account the savings on not having to pay employees occupational sick pay and other indirect savings such as loss of productivity and absence of management.
The figures relate to businesses with more than 500 staff and many factors were taken into account including sick pay, cost of replacement staff by way of salaries, recruitment and training costs to arrive at the annual figure of £620,000.
Conclusion of Cebr research
Head of microeconomics Oliver Hogan said “Much research has been conducted into the cost of sick leave to the UK economy but this is the first time research has been commissioned specifically to examine the cost of long-term absence.”
Chief financial officer at Unum UK Peter O’Donnell said “Most employers go above and beyond their statutory requirements by offering occupational sick pay to those on long-term leave, but argued that doing so can result in unpredictable costs which can have a significant impact on their bottom line. Income protection reduces this cost volatility, helping financial directors to have more accurate visibility of costs for the coming year.”