Mental Health costs rise for employers

The total annual cost of poor mental health to employers has increased by 25% since 2019, now totalling between £53-56 billion in 2020-21, according to a new national report published by Deloitte in March 2022.

The report is the third in a series on employee mental health.  It reviews the impact of the pandemic on the mental health of employees and seeks to understand how the pandemic affected the attitudes of employees to mental health.

The impact of the pandemic on mental health has been felt by many  but evidence from this report shows that some have been affected more than others. The report focuses on fyoung people; key workers; people with caring responsibilities and ethnic minorities.  It offers key learning for employers around supporting these diverse groups within their employee populations and highlights the importance of employers understanding the need to offer targeted support.

The report highlights the overall costs of poor mental health to employers – based on the combined costs of absenteeism, presenteeism (attending work despite illness and so not performing at full capacity) and labour turnover.

Overall presenteeism was the largest contributor to employers’ costs of mental health, and the so-called ‘Great Resignation’ had an impact too.  It saw large numbers of people leaving their jobs, re-evaluating their careers and changing occupations, leading to a ripple effect for organisations who had to fill those gaps and continue their operations.  The cost to employers of poor mental health was found to vary significantly between private and public sector services and between industry sectors.

Employees’ perceptions of mental health also differed between industry sectors with some of the steepest declines in mental health being reported in the education sector and in the hotel, catering and leisure sectors.  On a positive note, the education sector is also showing the best bounce-back towards pre-pandemic levels of mental health.

Commenting on the report, Paul Farmer, Chief Executive of mental health charity Mind and member of MHPP’s Strategic Advisory Board said:

‘The scale of poor mental health within the workforce is a huge challenge to employers – making sure they and their people managers are able to provide effective and appropriate support for employees experiencing new or worsening mental health problems.

‘Thankfully, a significant number of employers have risen to the challenge by signing the Mental Health at Work Commitment and investing in new programmes of support and training for different working environments.’

While the pandemic forced organisations to prioritise workers’ physical and mental wellbeing as a matter of survival, it is clear there is a link between employee wellbeing and organisational success.

Many employees now expect more support from their employer regarding their mental wellbeing and in this latest report, Deloitte make a series of recommendations that employers, leaders and organisations could consider in support of employee’s wellbeing and mental health.

According to the report, employers who invest in measures and initiatives to tackle mental health problems can expect to see an average return of investment (ROI) of £5.30 for every £1 invested.

Elizabeth Hampson, Director at Deloitte says:

‘Such initiatives should be promoted by leadership and aim to achieve a greater awareness of the issues, a shift in culture and a reduction in the stigma associated with poor mental health for greatest impact.’

‘Employers could also introduce schemes for monitoring and measuring mental health in the workforce and consider developing a portfolio of support measures.’