Record numbers (2.8 million) of working-age people in the UK are currently economically inactive due to long-term sickness. This should be a concern to all. Sickness affects people’s incomes, economic productivity and the nation’s growth. Reform to working conditions that helps employees lead healthier lives and reduces long-term sickness and presenteeism could have a key role in reversing the trend.
Clare Lusted, head of product proposition at leading employee benefits provider Unum, gives her thoughts on improving workplace conditions, health and economic growth.
What do we mean when we say “working conditions”?
This encompasses a broad scope of conditions and aspects of an employee’s working life. Many working conditions are prescribed by law. Employers, for example, are required to ensure the physical working environment is free from health and safety risks. Other conditions include working hours, wages and holiday entitlements, among other things. It can also mean health support in the workplace, ranging from private medical insurance to group income protection, and preventative services such as nutrition and exercise advice.
How do workplace conditions contribute to economic inactivity?
There’s growing evidence that demonstrates a link between employees’ health and happiness in the workplace and their productivity and rate of sickness absence; also, that healthier employees are less likely to need to leave their jobs due to long-term sickness. They’re much more likely to want to stay both in their current role and more generally in work.
In research commissioned by Unum, we found a significant number of employees believe that improvements in health and well-being services provided by their employer would make them healthier. It would lead to fewer days off and people would be more productive, increasing the likelihood of them staying with their current employer. And over half of the employees surveyed – which would be the equivalent of 16 million people – said that improvements in health and well-being offerings provided by their employer would lead them to take less time off and/or increase their productivity.
What should the government do to improve working conditions?
Unum is calling for four key policy changes that we feel can serve as a starting point for broadening the approach the government is taking. First, a collective commitment to improving workplace health and happiness. Second, to introduce a new system of statutory sickness support. Third, to look at a widened definition of occupational health, which would be part of the measures that are coming out of the government’s occupational health consultations. Finally, an introduction of national employer standards.
What has Unum uncovered about health and workplace productivity?
Last year, we commissioned independent think tank WPI Economics to carry out research with over 4,000 employees. There were three key findings from the research. First, employees who are happy at work take on average nine fewer sick days per year compared to employees who report being unhappy, suggesting that health and happiness at work really does reduce sickness absence. Second, 80 per cent of employees say that they are more productive at work when they are feeling healthy and happy, indicating that health and happiness at work are key drivers of productivity. And finally, employees with good physical and mental well-being are nearly two-and-a-half times more likely to be happy at work than those with poor physical and mental health, highlighting how physical and mental well-being are central to employee happiness.
What wider societal benefits would occupational health reform have?
Our research showed that boosting access to health and well-being services at work, alongside halving the number of unhappy employees, could see companies collectively benefit by £6.4bn a year through reduced lost output from sickness absence and presenteeism. On top of this, increasing productivity as a whole could benefit companies by an additional £7.3bn per year. The new Occupational Health Taskforce is a positive development and indicates seriousness. We’d like to see some policy continuity and reforms taken forward after the upcoming general election.
How can the government incentivise support for employee health and happiness?
The Treasury and HMRC published a joint occupational health consultation last year looking at tax incentives. We’re still waiting on the government response to that consultation. In our submission to it, we called for an explicit widening of the definition of occupational health to include provision of insurance and the associated benefits and services available. We also called for the removal of the “benefit-in-kind charge” on group critical illness policies, which limits employees’ access to support if they’re diagnosed with a serious illness, and for a reinterpretation of optional remuneration arrangements for group income protection. Under the current interpretation, cover funded by salary sacrifice is subject to double taxation. This means that salary sacrificed is taxable as a benefit in kind, and the benefits are taxed as earnings for income tax and National Insurance purposes. This discourages employers from facilitating protection for their employees, when we know it would benefit businesses, employees and the state.
This article first appeared in a Spotlight print report on Healthcare, published on 17 May 2024. Read it in full here.
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