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How poor mental health costs the economy billions

When well-being provision has so many benefits, why don't more employers invest in it?

By Richard Layard

Mental illness is the single biggest cause of misery in our society. It also wreaks havoc with the economy. We have to tackle it with better work practices and better access to treatment.

Roughly one in seven of all employees are living with a diagnosable depression or anxiety disorder. No wonder then that mental illness accounts for over 40 per cent of all sickness absence, as well as reduced productivity at work. The total output lost in the UK to such work-related issues is more than £100bn a year.

But much more serious is the suffering involved. So, what can employers do? When researchers study how happy people are during the day, work emerges as the least enjoyable activity on average. And the worst time of all is when employees are with their boss.

We need a revolution in management practice. Workers need to have much more influence on how their work is organised. Workers are 13 per cent more productive when they are happy, and research shows that managers play a crucial role in their employees’ happiness, through instilling good work organisation (providing them with the guidance, tools and autonomy to do their jobs well) and psychological safety. Bonuses also need to be based on how a team performs – not on the horrible practice of forced rankings, where managers rank each worker and allocate their bonuses accordingly. When such performance pay was introduced to a group of Danish companies, 6 per cent more workers went on antidepressants or anti-anxiety medication.

Employers have duties to their employees as well as their shareholders. They can only know how they are doing if they measure the well-being of their workers on a regular basis and publish the results in their annual report. This should be a minimum requirement for any company wishing to satisfy its social obligations in the environmental, social and governance (ESG) framework.

Morally, it is right to care for your workers – and it pays off too. For every £1 spent on mental health and well-being, employers receive an average return of £5. If you care for your workers, you provide a wholesome, friendly working environment, but you also care for them if they get sick. There are excellent treatments for depression and anxiety disorders. The National Institute for Health and Care Excellence (Nice) recommends specific psychological therapies, as well as medications. The NHS provides these treatments mainly through Improving Access to Psychological Therapy (IAPT) services across the country, and they should also be available through employee assistance (with shorter waiting times).

But how managers handle these problems is also crucial. It should be the line manager, not human resources (HR), that is trained to do this. Every line manager should be asking their employees if they are OK, offering help and advice, arranging time off, and allowing a graduated return to work once a crisis is over.

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These very practical steps are essential elements in a social transformation where the goal for society becomes the well-being of the people. As the House of Lords Covid-19 committee has argued, we need to move from a welfare state to a well-being state. In the levelling-up strategy, the government has adopted the target of increasing well-being in every area of the country. Reducing mental illness at work should be a key part of that strategy.

Also read: Why workers need preventative mental health care

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