Absence costs small business over €490 million per annum

Tuesday, 17 February 2015

    • Absence costs small business over €490 million per annum
    • 4,052,222 days lost in 2014
    • Back pain and anxiety/depression are the biggest contributors

The Small Firms Association has today published its Absenteeism Report 2014, which shows that absenteeism is costing small businesses over €490 million per annum. However, the report does indicate a lower level of absenteeism in smaller business when compared to their counterparts in larger enterprises.

The study conducted in 2014 took place throughout Ireland and covered all sectors of Irish business.

Commenting on the findings, Alan Sherlock, SFA Executive, said “absenteeism still has a significant impact in terms of direct costs for small firms, but the results do show an improvement for small compared to big business. For large businesses the average absenteeism rate is 2.34% or 5.4 days where as in businesses with less than 50 employees the rate is 2.06% or 4.7 days.”

“The direct cost to small business with sick pay schemes is over €490 million. When you include additional direct costs, such as replacing staff, paying overtime and medical referrals, and indirect costs, such as loss of productivity and the time spent managing absence, the overall cost is close to €1 billion," said Mr Sherlock.

Mr Sherlock further stated that: “The cost to business will be greatly increased when the Workplace Relations Bill 2014 is passed (expected end March 2015), as this includes a provision to amend the Organisation of Working Time Act 1997, to allow employees to continue to accrue annual leave whilst on sick leave. This will mean that an employee who is absent for a year, will still be entitled to four weeks paid annual leave. This is a significant increased cost to small businesses who are struggling to maintain competitiveness”.

“Geographically absence is highest in the West at 3.38% whereas the Midwest has the lowest rate of 1.75%” said Mr Sherlock.

Back pain/injury and anxiety/depression are the most commonly cited reasons for absence on medical certs”, stated Mr Sherlock. “Employers should ensure that they are fulfilling their duty of care to their employees by including manual handling and mental health when conducting risk assessments as part of their review of their health & safety statements.”

“Overall, absenteeism has been steadily declining over the past decade. This is due to the fact that as companies came under increasing financial pressure, they began to look to reduce costs which were within their power to control, such as absenteeism. While a well considered and developed policy on absence management is best practice, we advise our members to take some simple steps that can have a significant impact. In many cases it is just a matter of taking some time to accurately record and report absence and be more diligent in conducting back to work interviews,” advised Mr Sherlock.

Ends

For further information contact: Alan Sherlock, SFA Executive at Tel: 01 6051664 or 086 1731372 or e-mail: alan.sherlock@sfa.ie or Tweet: @SFA_IRL


% rate of absence by company size
Less than 50 employees2.06
50 - 99 employees2.49
100 - 249 employees2.05
250 - 499 employees2.34
Over 500 employees3.39
Total2.34

By region
Midwest1.75
Kildare1.89
Wicklow1.99
Midlands2.08
Southeast2.11
Dublin2.24
Cork2.27
Northwest2.86
Northeast2.93
West3.38

Top 11 Incapacities for Illness Benefit claims awarded and in payment at week ending 6th February 2015
Incapacity
%
BACK/NECK/RIB/DISC
14.20%
ANXIETY/DEPRESSION
12.97%
STRESS
7.41%
POST OPERATION/SURGURY DEBILITY
5.52%
LEG/KNEE/ANKLE INJURY
3.83%
ARTHRITIS/RHEUMATISM/O.A
3.72%
NERVOUS DEBILTY/BEREAVEMENT
3.60%
PREGNANCY/PET PROBLEMS
2.67%
FRACTURE/BROKEN
2.41%
CANCER
2.25%
POST NATAL DEPR/PND
2.24%

    Absence is defined as: ‘unscheduled disruption of the work process due to days lost as a result of sickness or any other cause not excused through statutory entitlements or company approval.’
    Formula: Number of days absence/(number of employees x number of work days available) x 100
    Average private sector weekly earnings - €605.98 (€121.20) per day (CSO Q4 2014 Earnings and Labour Costs)
    Cost per annum per employee of €121.20 * 4.7 = €569.64
    Small business accounts for 56% of private sector workforce (Revenue, 2013)
    Numbers of people employed in small business 862,175
    Direct cost per annum to small business for absence is 862,175 * €569.64 = €491,129,367
    Number of days lost is 862,175 * 4.7 = 4,052,222 days
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