Cost of sick staff could be $13b - report

20:41, Nov 15 2010
COSTLY: Treasury estimates the country is losing billions of dollars a year through sick days and workers who battle through illness but with reduced productivity.

Sick days and employees who battle through illness but with reduced productivity are costing the economy billions of dollars every year, a Treasury paper says.

However, the Government says its proposed changes to sick leave are unlikely to reduce the cost.

The research paper, issued today, says the annual indirect costs of ill-health – not including accidents and injuries – are at least $5.4 billion and could be as much as $13b.

That is equivalent to 8.5 per cent of gross domestic product and nearly as much as the Government's total health budget.

Most of the cost is through lost work hours because of sick days and "presenteeism", where people work through illness but are unproductive.

The cost of sick people going to work was estimated at up to $8b a year, although a more likely total was about half that, the report says.


The personal and financial costs are immense.

"As well as creating a heightened risk of injury or spreading of infectious diseases, workers are unlikely to be fully productive, resulting in lost output."

The costs were calculated from 2004-05 data collected for the government-funded Survey of Family, Income and Employment.

They are based on the average wage and survey participants' usual hours worked.

The research says the cost of people who took more than five sick days was about $200m. But if people who took only a handful of sick days a year were factored in, the cost would be closer to $1b.

The Government has proposed a labour law amendment that would require employees to provide a medical certificate for a single day off, if their employer asked for one, in order to cut the number of "sickies".

However, Labour Minister Kate Wilkinson said the amendment would not affect absenteeism or presenteeism because of illness.

"This paper doesn't investigate whether people take time off from work that cannot be justified on health grounds – as in sickies – so it doesn't have any implications for the proposed changes to sick leave rules."

Ari Chait, owner-operator of Wellington's Brooklyn Bakery and Dixon St Deli, said sick days in particular had an impact on his business, staff and customers.

"It just puts more pressure on the people who are at work that day. The impact might be less customer service ... and maybe those guys who are on aren't getting their breaks when they should be."

He preferred people to go home if they were unwell.

"The last thing you want to bring in is a cold and give it to 10 other people."

Alan Geare, head of Otago University's management department, said presenteeism was very difficult to accurately calculate.

"All the estimates are incredibly rough and ready.

"It seems to me that it's just figures plucked out of the ether."

The research also could not take into account presenteeism when people were not sick, but just not very productive, Professor Geare said.

The Dominion Post