Poor mental health could cost Malta businesses up to €328 million

Poor mental health is causing Maltese businesses between €265 million and €328 million a year, the authors of a study on mental health in the workplace say.

Paul and Nadine Sinclair’s study ‘Building Resilience: A Prescription For Tackling The Global Mental Health Challenge One Step At A Time’, by Malta-based Mind Matters, shows many employers remain unaware of the full impact of poor mental health on their bottom line.

Using conservative assumptions, they estimate the total cost of poor mental health to employers across Europe to be between €378-€469 billion each year. This cost comprises about €79-€99 billion in costs related to absence from the workplace, about €255-€304 billion in presenteeism (working whilst sick) and between €44-€64 billion in costs resulting from staff turnover.

Not only does presenteeism account for two-thirds of the cost of poor mental health to employers, but the Sinclairs’ analysis also revealed variables related to working whilst sick to be the most sensitive. Across all EU28 countries, the highest costs are due to presentee-ism (on average 65-68% of coss in the low- and high-impact cost scenarios, respectively), followed by absenteeism costs (on average 21% of costs).

In Malta alone in 2019, staff turnover costs related to mental health accounted for 13% to 16% of costs to employers: €35 million to €52 million annually.

The annual cost to employers associated with absenteeism or sickness absence is €19 to €24 million a year.

It is, however, working whilst sick which is the primary driver of costs to employers. In Malta, mental health-related presenteeism is estimated to cost between €212 million and €252 million annually.

Average annual cost of poor mental health per employee stood at €1,301 in 2019.

This compares well with Luxembourg’s €3,186 cost per employee, France’s €2,828, the UK’s €2,220 or Italy’s €2,185. Bulgaria, Romania and Lithuania registered the lowest employee cost.

Maltese employees worked, on average, 39.5 hours per week, compared to the EU’s 37-hour average. The average hourly labour cost in Malta is €15 (EU: €28.2).

The report explains that presenteeism occurs when employees go into work whilst sick, but as a result, do not work at full productivity. It must not be confused with pretending to be ill, avoiding work assignments or pursing unrelated activities at work such as social media browsing.

Different from absence from work, presenteeism is much harder to measure and quantify. Many organisations are very systematic about measuring and deterring absenteeism but miss the impact of presenteeism on the bottom line.

However, there is a close link between absenteeism and presenteeism: when an individual is unwell, they make a deliberate choice between taking time off to recuperate or carry on working.

The Sinclair report makes an emphasis on how not every employee with mental health challenges takes time off work. Indeed, employees with poor mental health are more prone to presenteeism than employees suffering from other health conditions.

The 2017 UK Mind Workplace Wellbeing Index survey results show that 81% of employees with mental health problems do not take time off when they do not feel fit to work.

The reasons for this are numerous and include stigma, concerns about job security and future career, worries about letting down co-workers and believing it is inappropriate to take time off in the absence of physical symptoms.

The report says that mental health has started to gain more attention in recent years.

With one in four people believed to be suffering from poor mental health each year, it is no longer something that affects the few.

“Poor mental health severely impacts an individual’s ability to thrive both personally and professionally. As our ways of working continue to change, workplaces will take centre-stage in addressing this challenge.”

The Sinclairs’ findings show that this rise in poor mental health also impacts business.

“Several factors have further increased mental health-related presenteeism in the work-place since the start of the COVID-19 crisis, including significant changes to the way of working, uncertain job prospects and increased financial strain.”

They insist that there is a convincing case for employers to tackle mental wellbeing in the workplace.

Analysis of workplace mental wellbeing programmes show that the business case is overwhelmingly positive, demonstrating average returns of €5.20 for every €1 invested.

Perhaps the most important insight from this analysis is that mental wellbeing in the work-place is a challenge that several companies have already mastered over the last few years. While it will not be easy for many companies to overcome poor mental health in the work-place, they will not start from scratch.