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It's official! The UK is grappling with a productivity crisis

Published: 24/04/2023

With the recent Spring Budget putting productivity into the spotlight, organisations need to be putting more focus on workplace wellbeing – not less – writes Pippa Andrews, Director of Corporate Business, Vitality.

Poor productivity is now accepted as one of the main factors hampering UK economic growth. It has even prompted an unprecedented package of workplace measures, announced by the UK Government, as part of its recent ‘Back to Work Budget’.

Changes to childcare funding and pension taxation aside, last month’s Spring Budget included a raft of measures aimed at keeping employees well and helping those who aren’t in good health get back to work.

With both mental health and musculoskeletal namechecked as causes for concern, these challenges are nothing new for professionals in the workplace wellbeing space.

“Addressing employee wellbeing and productivity requires a company-wide, joined up holistic approach”

- Pippa Andrews, Director of Corporate Business, Vitality

According to ONS stats, half a million more people are out of work due to ill-health than in 2019. Bringing the total to 2.5 million towards the end of 20221.

This is something reflected with our most recent Britain’s Healthiest Workplace (BHW) data, which revealed that during the same timeframe UK employers have seen a 39% fall in productivity, representing an economic cost of £127.9bn2 to the UK.

It is hardly surprising that The Chancellor is now taking steps to address it.

What is causing the UK productivity crisis?

Staggeringly, the main reason for all this is not unemployment or a lack of job opportunities (quite the opposite). It is largely down to economic inactivity driven by an unhealthy workforce3.

While a range of factors are behind it, even the former Chief Economist at the Bank of England, Andy Haldane, warned it is acting as an economic headwind during a recent speech to The Health Foundation4.

According to BHW, UK productivity has been dropping steadily since 2014. Alarmingly, one in five respondents reported suffering from burnout last year, resulting in an individual average loss of over 90 productive days per year2.

In addition to workplace pressures, a combination of the pandemic, the cost-of-living crisis and wider global issues has taken significant toll on the nation’s mental health – one of the most common reasons for workplace absence in the UK.

More than a tenth of survey respondents indicated having symptoms of depression, with those affected losing on average over 100 productive days per year2.

Whilst Government steps have served to shine a light on these challenges, they are unlikely to be enough on their own to turn the tide on the productivity crisis in the UK.

More than just wellbeing interventions

Addressing employee wellbeing and productivity effectively requires a company-wide, joined up holistic approach with the right interventions and a supportive workplace culture.

We know poor wellbeing can be caused by a range of factors, such as lack of physical exercise, poor nutrition and a lack of sleep, and too often measures are focused on providing a ‘down-stream’ solution - i.e. the point at which an employee is already experiencing ill-health.

The government’s objective of helping people that are living with health conditions return to work, such as by scrapping work capability assessments, is a worthy ambition. However more needs to be done ‘up-stream’, to keep people healthy and in work in the first place.

What’s more, since the pandemic employee attitudes have shifted. According to a recent report published by Vitality, a whopping 82% of UK office workers believe companies have a greater responsibility to support the mental health and physical wellbeing of their people following COVID5.

A turnkey wellbeing solution offering group private medical insurance (PMI) or a wellbeing scheme for an uninsured workforce is an effective way to support staff in this respect. Especially as employer-led schemes are increasingly offering an extensive range of preventative and wellbeing support services alongside primary and secondary healthcare services.

Sustainable behaviour change

The challenge facing any health and wellbeing intervention, whether government or employer-led, is getting employees to engage with it in a meaningful way.

Not only do organisations need to proactively signpost benefits and services to their people. But for a wellbeing solution to truly positively influence lifestyle change, daily interactions are what’s needed. This can, in turn, support employee wellbeing and drive productivity at work, even remotely.

The Vitality Programme, for example, is informed by the laws of behavioural economics to foster engagement through rewards and partners integrated into the programme, the largest of its kind linked to insurance.

Through digitisation, via an app, an employer can embed wellbeing benefits – such as access to mindfulness tools, discounted gym membership and savings on spa breaks and weekends away - into an employee's everyday life.

Positive feedback loops - created through the gamification of activity points and daily targets - help create tangible reasons to get involved. The more employees engage, the more value they get. They are also more likely to stay healthy.

Through this, employers can lead from the front by driving positive change and improve productivity in their organisations by allowing staff to access the right tools, using the right nudges, at the right time. They can also offer healthcare benefits and rewards that act as a key differentiator in a competitive job market and a powerful way to retain employees, while also driving better outcomes for all involved. This way, everyone wins.
Find out more about how Vitality can provide employees fast, seamless access to care and
help your client’s business improve their employees’ physical and mental wellbeing.

Where to next?

  • Employers need to tackle burnout – or get their fingers burnt

    With burnout on the rise globally1, a holistic approach to staff wellbeing embedded into healthy organisational culture not only supports staff – it unlocks productivity too, writes Vitality’s Jill Pritchard.

  • Why Novo Nordisk was named Britain's Healthiest Workplace

    We sat down with the mid-sized organisation to hear how it got the ‘sanity check’ it needed through taking part in the UK’s largest employee wellbeing survey.

  • Insights Hub

    Our Insights Hub brings you our range of adviser content - from video series to articles blogs.

1 Half a million more people are out of the labour force because of long-term sickness, ONS, November 2022
2 Britian’s Healthiest Workplace data, Vitality and RAND Europe, 2022
3 Falling employment and worsening health in the UK: connected or distinct trends? BMJ, 2023
4 Health is wealth? – REAL Challenge annual lecture, November 2022
5 Healthy Hybrid research, Vitality and CBI, 2022