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What Studies Are Telling Us |
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Direct Healthcare costs - Risk Factors:
The annual inflation rate for traditional benefits plans crept from 13.8% TO 14.8% IN 2009 and that trend is expected to continue. An aging workfroce, more educated and demanding health consumers and increasing workplace stress are all contributing factors to the growing utilization of benefits plans. This increase is at a much higher rate than other business costs. (Bucks Consultant's 2009 Annual Health Care Trend Study) Health care costs are 2x - 3x greater for an employee with 3 or more risk factors (i.e. sedentary lifestyle, smoker, overweight and drink too much) than those with no such risk factors. The more risk factors someone has, the greater the cost to an employer they are (Shain & Suurvail, 2001).
- Absenteeism:
Long-Term Disability costs are on the rise: a Watson Wyatt (2005) reports a 27% increase in LTD since 2003. This is partly due to an aging workforce, increasing demands on employees, and mental health claims. Workdays missed due to illness or disability tended to rise with age, from an average 5.2 days for youth (15-19 years) to 11.1 for full-time employees aged 54 through 64. (Statistics Canada Perspectives on Labour and Income, 2005) Employees with weak employment relations miss an average of 5.9 days due to illness compared to 3.7 days per year for those with strong relationships (Lowe & Schellenbert, 2001). The cost of absenteeism due to staff experiencing role overload is estimated to be $3.1 billion/year (Duxbury & Higgins, 2003). The estimated cost of absenteeism due to staff experiencing family to work interference is approximately $450 million/year (Duxbury & Higgins, 2003). 70% of disability is related to behavioural factors - your employee’s lifestyle choices affect the health costs you incur.
Stress & Mental Health: Mental health problems are the leading cause of disability in workplaces in Canada. Studies show one in four employees have a mental health-related problem. (Conference Board of Canada and Canadian Mental Health Works, 2008) $33 billion is lost in productivity annually due to mental illness in Canada. Depression and anxiety alone cost the economy $14.4B per year. (Global Economic Roundtable on Addiction and Mental Health, 2008) Only 43% of employees report having ready access to services and tools at work to help with mental health issues. 58% of Canadians report overload associated with their many roles - work, home, family, friends, physical health, volunteer/community service. (Desjardins Financidal Security Survey, 2007). Healthcare expenditures are approximately 50% higher for those employees reporting higher stress levels (Burton, 2004). 50% of Canadians have high levels of stress, caused by an unhealthy work environment where job demands exceed control; excessive workloads are the norm; decision making is top down; and managerial support for work-life balance is lacking.
- Smoking
- The Conference Board of Canada updated its 1997 study on the costs to employers who employ smokers, and it found that the total costs have increased from $2,565 per smoking employee in 1997 to $3,396 in 2006. (Smoking and the Bottom Line: Updating the Costs of Smoking in the Workplace, Conference Board of Canada, 2006).
Indirect Healthcare & Staffing Costs - Aging Workforce:
Canada's workforce is aging. Older workers (55-64) average twice as many sick days as their younger counterparts. Benefit costs and absenteeism will likely escalate if older workers do not improve their health.
- Shortage of Skilled employees:
- Retention and turnover costs:
The cost of turnover adds hundreds of thousands of dollars to a company's expenses. While it is difficult to fully calculate the cost of turnover (including hiring costs, training costs, and productivity loss), industry experts often quote 25% of the average employee salary as a conservative estimate. (Nobscot, 2005)
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