The High Cost of Absenteeism
Blasco de Luna, F.J.; Blázquez, E.M.; Gallifa, A.; et al.
Original document: Informe Adecco sobre absentismo (I)
Workplace absenteeism can be a significant drain on companies and the wider economy as a whole, especially in times of crisis when most businesses are under pressure to cut costs and raise productivity.
However, it is always difficult to judge which absences are justified or not.
To shed light on the matter, a study copublished by IESE's International Research Center on Organizations (IRCO) brings together recommendations from legal experts, insurance companies and business managers for improving absenteeism procedures in Spain.
The Ins and Outs of Absenteeism
Absences may be justified on grounds of ill health or maternity leave, but in some cases are unwarranted and should be avoided. The factors driving absenteeism are:
Institutional. These derive from either generous social protection or lack of control over leave from work.
Socioeconomic. The profile of absentees is linked to their age, gender, civil status, income and the type of company and sector in which they work.
Some studies indicate that absenteeism is higher among men who work in industry and agriculture and have a low level of formal education.
Absentee women, on the other hand, tend to have a higher level of education and work in service industries or the public sector.
Working Conditions. The employees who take the most days off tend to be in psychologically demanding jobs with little social status and unpredictable hours.
By contrast, when people are more satisfied with their work, the rate of absenteeism falls by around 25 percent.
Compensation Models. Compensation has a direct bearing on absenteeism: the highest rates of absenteeism are in the lower ranks of the organization.
Systems such as payment by results, profit sharing or access to share options have all been seen to reduce absenteeism.
Apart from Spain, the researchers analyzed data on absenteeism in Australia, Canada, Denmark, Finland, Switzerland and the United States between 1970 and 2010.
Spain stands out as the country with the most days off, with workers missing an average of 11.6 days per year, followed by Switzerland (10.9) and Finland (8.3).
Most worryingly, there is a growing trend toward greater absenteeism in all of these countries.
Denmark (7), Australia (6.8) and Canada (6.6) are in the middle, with an upward trend since 1996.
The United States has the least absenteeism (4.9) with a downward trend since 1996.
According to the study, the number of days off depends on four variables: the level of take-up of private medical insurance, the standard of education, the rate of overall unemployment and the proportion of salary paid per day off.
In general, the higher the uptake of private medical insurance or standard of formal education, the lower the rate of absenteeism.
The opposite pattern occurs the more workers are compensated during their days off.
Absenteeism in Spain
Of the 240 hours not worked by the average Spanish worker in 2010, 185 corresponded to vacations, public holidays, training or paid leave; 53 were accounted for by illness, maternity leave, seasonal layoffs and industrial conflict; and only 1.7 as unjustified absence, according to the official surveys.
However, some studies suggest that 35 percent of absence through illness may be unjustified, which would give a result of 18.4 hours not worked per employee per year, or 20.9 hours if the unjustified absences are included.
These figures suggest that the direct cost of unjustified absence in 2010 is as much as 343 euros per year (29 euros per month) for every salaried employee, in excess of their salary.
The crisis has had some impact on absenteeism. In 2010, the hours not worked, both for vacations and public holidays, as well as for other reasons, actually fell for the first time in seven years.
On a sector-by-sector basis, the rate of absenteeism in 2010 was around 5 percent in industry, 4 percent in service sectors and 3 percent in construction.
The highest increase in recent years was in construction, which rose by 43 percent from 2003.
In companies with fewer than 10 employees, the rate of absenteeism is negligible, at just over 2 percent, while in companies with more than 250 employees, it reaches as much as 5.8 percent.
Measures to Combat Absenteeism
Many companies would like to put an end to absenteeism, but controlling it comes at a cost, not only financially, but also in terms of employee morale and the working environment.
The authors of the report propose three social policies to address the problem:
1. Regulation that gives companies and the courts clear criteria for dismissing employees on the grounds of unjustified absenteeism.
2. Involving trade union representatives and companies in the struggle against absenteeism.
3. Transferring some of the responsibilities for the management of absence through illness from social security to private insurance schemes. This would reduce waiting lists, allowing workers to return to their jobs more quickly.
As for the companies themselves, they should:
- educate people on the impact of absenteeism;
- use IT tools to manage leave;
- have their own medical and social service policies;
- reward workers and not absentees;
- punish fraudulent cases;
- in general, improve the overall working conditions by promoting flexible work hours and work/life balance.