Why healthier staff mean better business for SMEs

Lucie Mitchell reports on the latest moves to improve occupational health, particularly in SMEs, and so stop older workers and others from dropping out.

Middle aged warehouse worker in a warehouse, clutching his shoulder to depict occupational health issue


Work-related ill health is a major problem in the UK. Since the Covid pandemic, large numbers of older people have dropped out of the workforce for health reasons. According to the latest figures from the Office for National Statistics, an additional 491,433 people became economically inactive due to long-term sickness between May and July 2023, meaning a record high of 2.6 million people are now off work because of their health.

These figures are extremely worrying, warns Vicky Walker, director of people at Westfield Health. “Equally worrying is the fact that this number only seems to be growing, largely driven by those in the 50-64 age group.”

The financial burden of this on employers is also significant. In fact, the Society of Occupational Medicine estimates that lost output due to sickness absence costs around £32 to £41bn per year.

“The British Occupational Hygiene Society has called the scale of work-related ill health a national crisis,” remarks Professor Chris Warhurst, director of the Institute for Employment Research at the University of Warwick. “Dealing with this crisis would reduce costs and create benefits not just for employers but also individuals, the NHS and the state.”

The general state of employee health and wellbeing matters, adds Christian van Stolk, executive vice president at RAND Europe. “The labour market has been tight since the COVID-19 pandemic, and we have a cohort of individuals not participating due to sickness. This impacts on benefits and the sustainability of the system.”

Keeping people in work

Investing in occupational health (OH) services is therefore a vital part of the puzzle for employers who are focused on supporting the health and wellbeing of their employees and helping them to stay in work. However, with limited budgets and resources, this can be particularly challenging for SMEs.

In fact, according to government statistics, large employers are five times more likely to offer OH services than small employers. The government has recently launched a consultation on how to increase uptake of OH provision, with a particular focus on SMEs, including funding announced for OH innovation projects for SMEs and the self-employed, as well as plans to expand the Occupational Health SME Subsidy Pilot in England.

“Organisations can benefit greatly from investing in occupational health services,” comments Rachel Suff, senior policy adviser for employment relations at the Chartered Institute of Personnel and Development [CIPD]. “Their medical expertise and knowledge of the workplace means they can provide valuable advice on areas such as fitness to work, reasonable adjustments and the main risks to employees’ health. Large employers are more likely to afford OH services and so we welcome the government’s pilot providing a subsidy for SMEs to access OH services. The CIPD believes every employer should have access to quality OH services.”

As is often the case when it comes to health, prevention is better than cure, adds Walker. “Supporting people before they leave the workforce is key to bringing down rates of economic activity. This means investing in structured occupational health and workplace wellbeing programmes that are tailored to the needs of your people.”

SMEs and OH

According to research by the Federation of Small Businesses (FSB), 28% of small employers provide OH services to their staff, however for those that don’t currently access these services, 25% say it is because they don’t know enough about OH services and 18% believe it is not relevant to their business.

“Improving access to high-quality occupational health may improve the health outcomes of staff and self-employed people,” comments Tina McKenzie, policy chair at the FSB. “Best practice in occupational health will look different depending on the type and size of business – what works for a small manufacturing firm will look different to the needs of a self-employed accountant, for example.

“Occupational health needs will also vary from person to person, even within the same firm, and older workers in particular may benefit from a more comprehensive occupational health offering,” she adds. “Small firms looking into occupational health services should do their research and undertake a thorough assessment of what they and their staff actually need.”

So how can SMEs best manage occupational health? “I believe it’s all about customising the approach,” suggests Sophie Bryan, founder and chief workplace culture consultant at Ordinarily Different. “SMEs often have limited resources; that means they need to find cost-effective strategies to suit them. This might involve teaming up with outside occupational health experts, introducing wellness programmes, and
making sure the workplace is safe.

“However, in my opinion, there’s still room for improvement in how occupational health is done,” she adds. “There are hurdles like cost issues that make it hard for SMEs to get access, as well as uneven quality of services. Arguably, there’s also the need for better integration of occupational health into overall workplace plans. Government incentives and rules can help SMEs invest more in their employees’ wellbeing, but more work needs to be done in this area. We need reforms that make these services more accessible, ensure high quality, and seamlessly blend occupational health into our workplaces. This way, we stand the best chance of ensuring a healthier, more productive workforce to keep our economy humming.”

According to van Stolk, bringing SMEs together to share resources and knowledge, or providing direct support to them, will be important in driving change. “Resources can be provided by regulators, government, and sector bodies. However, information by itself often does not lead to changes in behaviour. As such good practice often consists of SMEs grouping together to procure services and learning from each other. In some cases, large employers may have extensive occupational health services and extend these to the SME supply chain that they work with.

“SMEs being strong on occupational health is often driven by leadership who get the importance of good occupational health and its link to the bottom line. Healthier staff generally produce better outcomes for the business.”

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