• 6 million days lost in small business in 2006

• Absenteeism from work costs small business €757 million per annum

• National average is 9 days

• Small firm average is 7 days

• Medium firm average is 11 days

• Large firm average is 10 days

• Electronics and Metals/Engineering sectors suffer most

• South-East and West show highest levels of absenteeism

• Stress is the biggest contributor

A new report by the Small Firms Association has shown that small businesses in Ireland lose on average €757 million per annum through absenteeism. The report also shows that workers in small companies are less likely to miss work through illness than their counterparts in larger businesses.

The study conducted by the Small Firms Association took place throughout Ireland and covered all sectors of Irish Business.

According to Avine McNally, Assistant Director of the Small Firms Association "the results show marked differences across sectors and regions, and show that small firms with less than 50 employees, are less likely to have workers absent on sick leave than larger firms."

The national average for absenteeism is 3.8% or 9 working days. For medium firms this rises to 4.9% or 11 working days. For small firms the average falls to 3.1% or 7 working days.

In cash terms, absenteeism costs small businesses with sick pay schemes an estimated €757 million per annum, based on average earnings of €120 per day / €30,800 per annum. "This takes no account of other direct costs such as the requirement to replace absent staff with other workers or overtime payments, and the cost of medical referrals; or of the indirect costs such as the effect on productivity and quality, the increased work pressure on other colleagues, and the admin time in managing absence". The overall cost in reality could be in excess of €1 billion", commented McNally.

"Stress has arisen as a key cause of absence from work, replacing back pain, as the most commonly cited problem on medical certs", stated McNally.

"This is a particularly concerning development, as aside from absenteeism, stress can lead to a less productive workforce, faulty decision-making, and ultimately the possibility of legal action being taken against the company for negligence or constructive dismissal".

"Employers should ensure that they are fulfilling their duty of care to their employees by conducting stress risk assessments as part of their review of their Health & Safety Statements, as well as implementing a specific policy on workplace stress.

They should educate employees on stress management, while being receptive to the potential causes of stress and the early warning signs of stress. On a practical level, they should also ensure that their Employers Liability Insurance will protect them against any compensation awards that may arise from this area", she added.

The SFA says that the increased incidence of stress is not a particularly Irish phenomenon - an ILO (International Labour Organisation) Survey from 2000 shows that in the EU overall, 4% of the gross national product goes to treat mentally-ill employees, whilst in the UK, three in ten employees suffer from mental health problems, resulting in an estimated 80 million lost working days a year and 14% of NHS in-patient costs and 25% of the cost of medication result from stress-related illnesses in workers. The World Federation for Mental Health has predicted that by 2020 the primary cause of lost working time will be stress.

"This is not just a workplace issue", commented McNally. "It is a national problem that needs to be addressed with some urgency".

Over half of the companies partaking in the study indicated that they recorded the causes of short-term absence. Minor illnesses are the most common cause for short-term, uncertified absences, while secondary causes are home responsibilities and personal problems. Companies who formally record absence are more likely to see their absence as unsatisfactory or a serious problem, it is essential that small firms be proactive in dealing with the issue of absenteeism and introduce policies and procedures to address the problem, companies who formally record absenteeism are more likely to see a decrease.

The survey also showed that most absenteeism occurred in the electronics industry, which averaged 16 days (7.1%), followed by the metals/engineering sector at 11 days (4.7%). This may be explained by the repetitive nature of the work involved in these industries. In marked contrast, small firms generally have more flexible jobs, multiskilling, less pigeon holing and jobs are less boring. The industry with the least amount of absenteeism is the wholesale distribution & transport sector where there is a lot of interaction between people and services.

In term of regions, the South-East and West fair badly, with the average in the South-East being 13 days (5.4%) and the West being 12 days (5.3%).

McNally concluded, "the results of this study highlight the need for business to have an overall policy to deal with absenteeism. There are issues for both employers and employees. Employers should be aware that there are a wide range of factors that can influence employees’ attendance patterns and levels. These include good communication, training and development, working conditions, job design, team working and the creation and fostering of a culture and organisational morale, which encourages and recognises excellent attendance. Promoting employee health and welfare, tackling the issues surrounding stress in the workplace and management training for handling absenteeism, should assist in reducing absenteeism."

Absenteeism is defined as the "unscheduled disruption of the work process due to days lost as a result of sickness or any other cause not excused through statutory entitlements or company approval." Absenteeism excludes statutory leave, e.g. annual leave & public holidays, maternity leave, parental leave, force majeure leave, carer’s leave; days lost due to strikes and lay-off/short-time; and excused time off, e.g. bereavement leave, exam & study leave, marriage leave and paternity leave.

CSO Quarterly National Household Survey, November 2006, total employment = 2,066,100

Public Sector Employment, Department of Finance, 2006 = 335,566

Implies private sector employment = 1,730,534

Small Firms, i.e. those employing less than 50 employees account for approximately 50% of all private sector employment = 865,267.

Average 7 days absence per employee per annum in small business = 6,056,869 days lost.

Average industrial earnings = €624 per week (daily rate approx €125). Total Cost = €757 million.