Long-term sickness impact on UK businesses revealed

A new study from Barnett Waddingham reveals long-term sickness is driving up absenteeism in over three-quarters (78%) of UK businesses, with a third (34%) seeing productivity declines as a result. This comes at a time when long-term sickness and ageing workforces have resulted in increased healthcare benefits costs for two-thirds of businesses (66%).

The findings also reveal the challenges businesses face with supporting an increasingly ageing workforce, which is more susceptible to health issues and changing job demands.

Challenges in supporting an ageing workforce

The study surveyed 301 HR directors and C-suite business leaders in UK companies. The findings show that while long-term health issues were observed across all age groups, a third (34%) saw that they were most prominent among those aged 55-68. As a result of long-term sickness, businesses noted they had encountered additional challenges including increased employee workloads (40%), a decline in staff morale (35%), an increase in people-related risk (31%) and a decline in overall employee wellbeing (29%).

Leaders have also expressed their concerns over the impacts that an increasingly ageing workforce is having upon their businesses. Over a quarter (28%) said they had been required to hire to fill skills gaps, 22% have had to change their recruitment processes, while 18% have had to increase training.

"Businesses are facing a critical risk to their organisation’s future if they don’t recognise and address these problems. If left unchecked, businesses may soon be dealing with faltering productivity, dissatisfied employees, and even financial losses."

Rising costs and people-related risks

Furthermore, the combination of long-term sickness and ageing workforces mean businesses have faced increased people and cost-related risks. Most significantly, two-thirds (66%) said they have seen an increase in healthcare benefit provision costs, while nearly three quarters (74%) have observed a decline in the wellbeing of their workforces. Over half (57%) have raised concerns about age discrimination/ageism in their workforces, and a further three quarters (74%) noted that older employees have been unable to grasp new technologies/processes.

Despite these concerns, nearly three-quarters (70%) of businesses reported feeling adequately prepared to manage the impacts of long-term sickness in the workforce, and 73% regarding an ageing workforce. But when it comes to addressing these specific challenges, firms are split on what would be most beneficial to resolve them. 31% feel that more flexible working arrangements would be helpful, while just over a quarter (26%) said improved healthcare benefits are essential. A fifth (22%) however, would like to see increased government focus on fixing the healthcare system and reducing NHS waiting lists, to alleviate the burden on their business.

"As an employer, it's crucial to have an intimate understanding of your workforce to be able to assess the potential risks that it, and your business, faces. And this is exactly where collecting, analysing and drawing insights from data is essential."

Businesses' priorities for addressing health and productivity risks

Encouragingly, businesses are shown to be taking steps and considering the priorities needed to alleviate these risks. A third (33%) say developing tailored wellness plans for different age groups is a strategic priority for their business, and a similar number (34%) are looking to increase access to physical health resources. 35% are also looking to invest in technologies to support remote healthcare.

Julia Turney, Partner and Head of Platform and Benefits at Barnett Waddingham, said: “We’ve seen the headlines on long-term sickness and ageing workforces, and we now have the proof. Businesses are facing a critical risk to their organisation’s future if they don’t recognise and address these problems. These are serious and sensitive issues, impacting real everyday people, and they must be treated as such. If left unchecked, businesses may soon be dealing with faltering productivity, dissatisfied employees, and even financial losses.

“The first step to addressing these issues should be understanding the scale of them. As an employer, it's crucial to have an intimate understanding of your workforce to be able to assess the potential risks that it, and your business, faces. And this is exactly where collecting, analysing and drawing insights from data is essential. What is the breakdown of age groups across the business? How many people are utilising healthcare benefits? How much is that costing us? These are all important questions that can be answered."

A call for broader solutions from government and industry

Julia added: “Beyond what businesses can do themselves, there’s still an industry-wide problem that needs to be solved. Over nine million people are still classed as economically inactive, a large chunk of which is because of long-term illness. On top of this, the rising cost of living, and more recently the testing Budget, will see more and more people staying in work for longer. The government is clearly wanting to resolve this, with investment in the NHS and its 'Get Britain Working' whitepaper - but the devil will ultimately be in the detail of how this is executed.”