The Frost/Black review addressing long-term sickness absence can help drive UK growth, but SMEs are core, says John Letizia.
There is no more pressing issue in the UK today than the hunt for economic growth. Given that long-term sickness absence of six months or more costs the UK economy £6.5bn a year in direct costs alone, it is perhaps little wonder that businesses across the board were quick to welcome the Frost/Black Review of Sickness Absence when the report was published in late 2011.
The issue is fundamental to the growth agenda because it particularly affects small and medium enterprises (SMEs). These companies directly contribute more than 50% of UK GDP according to the Federation of Small Businesses, but if anything that figure underestimates their importance.
Not only are they job creators in their own right (SMEs account for 59% of private sector employment), they are also the building blocks of the supply chains of the biggest companies.
However, individual SMEs are often reliant on a small number of highly experienced and skilled staff, leaving them particularly vulnerable to the impact of a period of sickness absence.
No back-up plan
Without a back-up plan to protect themselves, UK businesses lose £3.1bn per year due to long-term accident or illness affecting their staff in the form of sick pay costs, lost productivity, recruitment and training of replacement staff and the associated red tape. The same logic clearly applies at a national level.
To illustrate the scale of the issue, recent research by Oxford Economics has shown there are currently 63,000 people with cancer who want to work but are unable to due to a lack of understanding or flexibility, costing the country £1.8bn in lost economic activity.
On the flipside however, 560,000 people in the UK workforce do have cancer, contributing £16bn to the UK economy. If these are the figures for cancer alone, imagine the impact if best practice in absence management was rolled out across the board.
Helping small businesses, therefore, must be a vital plank of any effective strategy for growth. However, the Department for Work and Pensions' own figures show that 300,000 people a year leave the workforce because of illness or injury, many of whom still want to work.
The recommendations put forward in the Frost/Black Review were therefore both important and timely. The government's response, which appeared in January this year, was a key piece of the jigsaw in empowering small firms to drive our economy forward.
