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Why employers need to pay attention to the business of health

Investing in health will pay off in the workforce. Phillie Casablanca , CC BY

Amid all the talk of the UK’s economic recovery it is easy to forget that workforce health is a productivity issue. Over the next 20 years, as our workforce ages, retires later and the risks of more chronic and work-limiting health conditions increases, the pressure to invest more energy and resources in preventing those conditions will become more intense.

The business benefits to employers of healthy workers is very clear – but a large number of organisations are still not investing in simple measures to promote health at work. There is a recognition at the top of the NHS that employer action here is long overdue. In his Five Year Forward View, Simon Stevens, chief executive of NHS England, urged more employers (including the NHS itself) to invest more. He even suggested that incentives from the government might be made available.

So why might the government want employers to do more? There are several reasons. For example, two of the biggest health problems experienced by working-age people are musculoskeletal disorders (31m lost working days each year) and mental illness (15m lost working days each year). Despite some improvements, these issues are still not adequately addressed by the NHS. Lost productivity at work may also undermine the performance of employers and increase healthcare costs in cases of long-term absences from work.

It could be argued that greater investment by employers in prevention, early detection, signposting and timely referral via workplaces – even if work is not the primary cause of ill-health – makes good sense, especially as the new Fit for Work Service, a new free assessment and rehabilitation service being launched by government in 2015, will only offer help once someone has been absent for four weeks.

Another reason is that the workplace is a good (and under-utilised) arena for the delivery of public health messages and interventions such as health risk assessments, education, supporting lifestyle change, promoting exercise, healthy eating and helping people stop smoking. There is also a wider public benefit for society at large, as well as “private benefit” for business, if more employees get access to such interventions through their work. It is likely that, with greater investment by employers in lifestyle-related interventions, there would be less sickness absence and a reduced burden on primary care.

Why it’s problematic

Put this way, it seems obvious that the government would be in favour of encouraging more employers to invest more in workplace health interventions. But, in reality, this is a problematic area, for several reasons.

The costs of ill health in the workforce are spread across a range of stakeholders – this means that no single stakeholder has an over-riding incentive to invest in improving matters because of the fragmented way that the benefits or returns to this investment accrue. Indeed, the benefits to wider society of investing in workforce health exceed the benefits to any individual stakeholder – including employers.

In reality, employers might also argue that there are few incentives to making such investments by themselves if the main beneficiaries are to be individuals and their families, the NHS (through lower healthcare costs), the Department for Work and Pensions (through lower welfare costs) and HM Treasury (through higher income tax receipts). Although many businesses take their wider societal obligations seriously, it can be hard to make a compelling argument that they should spend money on interventions from which they are not the main beneficiaries.

There also remains a significant and potentially dysfunctional market failure in workplace health interventions which means that, left to them, it can be rational for employers to under-invest in workforce health. This is not great news for those of us who argue that the business case for employer investment is “compelling” and irresistible and who berate some employers for not doing more.

In the first policy paper from The Work Foundation’s new Health at Work Policy Unit, we take a detailed look at what government might do to be more of a catalyst for change. One of our conclusions is that, if government wants to reap the societal benefits of a healthier workforce – and the increased productivity that flows from this – it has to invest more in well-targeted incentives to employers to encourage them to act in their own interests and those of society at large.

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