The workplace health crisis

The UK's workplace health crisis is costing the economy £138 billion annually, with a record number of people out of work due to long-term illness. Addressing this challenge isn't just a matter of corporate responsibility — it's a critical strategy for driving productivity, innovation, and sustainable growth.

The UK is getting sicker. The number of people in the UK not working because of long-term sickness recently reached a record high of 2.8 million, from 2.1 million prior to the pandemic. Another 3.7 million working-age people are in work but with a health condition that is ‘work-limiting’, meaning it limits the type or amount of work they can do - an increase of 1.4million over the past decade. Poor health is costing the UK economy dearly to the tune of £138 billion a year. 

What is causing this crisis? And how can employers respond to the new challenges faced?   

The reasons behind the crisis are complex and varied, with various demographic, social and economic factors playing their part. 

An ageing workforce

Firstly, cost-of-living factors are leading to many older people having to rethink their retirement plans. Many have had to return to work after discovering their pension payments fell short of living costs. Others are choosing to stay in work longer to build up a pension pot for a better retirement outcome. And many are accessing their DC pensions early to pay bills, while they continue to work. 

People are living longer, and this means they need sufficient funds for a longer period. It’s a reminder of how important retirement planning is and highlights the need for a review of pension scheme design and management to improve retirement outcomes. 

How does this affect the overall health of the workforce? 

A greater proportion of the working age population in their 50s and 60s and beyond increases the incidence of chronic health problems. And the reality is, an ageing workforce is more likely to suffer from long-term health conditions such as musculoskeletal disorders (chronic pain is a huge problem, but often invisible), heart problems and chronic breathing issues. These can be work-limiting and, in some instances, lead to long-term absence or early retirement. 

"It’s clear that a healthier workforce is a more productive workforce."

When you factor in the strains on the NHS and long delays for treatment, the high levels of economic inactivity and (often treatable) health issues at work are not surprising. It’s clear that a healthier workforce is a more productive workforce. 

In addition, increases in life expectancy are putting more pressure on others (e.g. family members) to provide care. But many carers then find themselves forced out of the workplace due to incompatible and inflexible working arrangements.  

Young people are also struggling

The rise in economic inactivity and work-limiting health conditions is also a key trend for another group – younger people. Indeed, younger and older people together account for nine-tenths of the rise in overall economic inactivity. 

"Many young people are working in poor quality and insecure jobs, which creates huge pressures in their lives – made worse by the idealised standards presented on social media, especially around self-image."

Mental health conditions, such as anxiety and depression, are increasing across all age groups, but particularly so among the young. In a recent ONS survey, mental health problems were most prevalent in the youngest age group, affecting 36% of 16 to 34-year-olds who were out of work due to long-term illness. More than a third of 18 to 24-year-olds are reporting symptoms of mental illness. And the rate of work-limiting conditions has grown fastest among younger workers, doubling in just the past decade.

The young are therefore struggling. They have all the usual education and career pressures, combined with social and financial challenges such as access to affordable housing and adequate incomes. This can have a hugely detrimental effect on someone’s mental (and physical) health. Many young people are working in poor quality and insecure jobs, which creates huge pressures in their lives – made worse by the idealised standards presented on social media, especially around self-image. 

They have also lived through the turbulence of the Covid-19 pandemic and lockdown, which may seriously have affected many who were in education or just starting their career at the time, and the subsequent cost-of-living crisis. These experiences are likely to have negatively affected a considerable number of today’s young people during their most formative years.   

What can employers do? 

Aligning with the challenges these two generations are facing both in and outside the workplace, flexibility and healthcare have recently been shown to be the top two most valued benefits an employer can offer (MBWL’s Global Benefits Forecast, 2024). 

"What’s crucially important for employers is to create the right workplace culture – where the principles of good health and wellbeing are actively encouraged and supported."

Employers can offer flexible working arrangements to better support workers of all ages, to enable greater choice and control regarding working hours to suit their physical and mental health needs. The employer and employee have the opportunity to agree flexible working arrangements that meet both their needs. This helps people to stay in the workforce for longer and to thrive in their careers. 

Employee health benefits can also be used to support the workforce and get them back to work sooner. However, traditional health benefits may need a review. The workforce has changed, and employers and their healthcare insurance providers must keep up with an evolving diverse set of needs. Rather than waiting months for an NHS diagnosis, the right health insurance enables employees to gain direct access to a specialist so they can get a quicker diagnosis and potentially faster treatment and support. This also helps employers attract and retain top talent. 

What’s crucially important for employers is to create the right workplace culture – where the principles of good health and wellbeing are actively encouraged and supported. For example, HR and line managers should be able to educate and signpost employees to practical support for both physical and mental issues, thereby minimising the incidence of long-term absence and the disruption this causes. Rapid access to occupational health will, in many cases, improve a health condition or at least reduce the symptoms from worsening. 

A health warning for employers?

While it’s essential to recognise the experience and expertise that older employees bring to the workplace, employers need to understand the risks that an ageing workforce represents. Organisations need to know these risks now in order to be better prepared and more resilient. This can be done, for example, through scenario analysis exercises and horizon scanning. A working age population that is more at risk from ill-health increases costs through long-term absence and early retirement, thereby reducing productivity. 

"Organisations need to achieve a successful balance between offering workplace benefits and working arrangements that make employees feel happy, supported and resilient while delivering an acceptable return on investment and impact on the bottom line."

MBWL’s recent research on global benefits trends shows that in the UK the cost of benefit programmes is the number one consideration for companies when designing a benefit strategy (picked by an overwhelming 88% of survey participants). In mitigating costs, employers should focus on cost-effective healthcare solutions that do not compromise on quality. Creative thinking is required, for example the utilisation of savings through automation and other efficiencies to reallocate resources and invest in healthcare benefits that meet the specific needs of both the younger and ageing generations in the workforce. 
 
Organisations need to achieve a successful balance between offering workplace benefits and working arrangements that make employees feel happy, supported and resilient while delivering an acceptable return on investment and impact on the bottom line. Employers will need to review their benefits and working arrangements to meet the requirements of older workers, ensuring a more flexible approach to recruit and retain the right talent. But if the spend costs more than the value of a productivity increase, it’s not going to be an effective strategy. 

Will this therefore mean downgrading or even excluding some employees from benefits, based on their health condition or disability? Will it mean a two-tier system? How will this affect the terms of employment contracts? Will this mean equal work for less reward? And what about the reputational risk to an organisation, keen to promote equality, diversity, and inclusivity? These are considerations that employers must consider when deciding how to support their workforce, while achieving business success. 

Building a healthier, more resilient and productive workforce

To build a healthier, more resilient, more productive workforce starts by understanding the shifting workforce demographics and the challenges this presents. This is something employers must recognise and address. 

Understanding the unique make-up of a diverse workforce – it’s DNA – will enable organisations to identify where best to focus resources. Risks can then be better managed, and opportunities seized upon. This benefits employees but also gives businesses a competitive advantage. 

Every business will require a different solution, which is why analysing their Employer DNA is such a vital tool for establishing a clear picture of the road ahead. Combining HR expertise with actuarial science allows us to provide analytical methodologies, in order to drive smarter decisions and deliver real transformation to a business.