New research challenges cost of worker absence

Barely a month goes by without some survey about the cost of employee sickness and absence. For example, see a previous posting of mine.

For change a piece of research has emerged to suggest the cost of absenteeism to British industry is much less than previously estimated. What is most strange of all is how little media attention the research commanded.

In a paper entitled Pay, technology, and the cost of worker absence (Melvyn Coles, Joseph Lanfranchi, Ali Skalli, and John Treble) the authors believe a figure cited as being the cost of absence in the UK - £13bn (CBI) in 2005 - to be off the mark. The reasons for challenging the figures are as follows:

1) Not all businesses operate in the same way, which means that absenteeism may have more financial impact on some than on others.

2) The way in which the cost of absenteeism is estimated takes into account factors that the CBI survey does not. In effect, the CBI measure inflates absence costs by ignoring the extra expense that is incurred in reducing absenteeism.

I admit it doesn't make total sense to me as economics always confused me as an undergraduate. What I think they are saying is that absenteeism only becomes a big problem when tight JIT systems conflict with unexpected levels of absence.

A press release on the research can be found here.

1 comment:

Wally Bock said...

Don't worry about not understanding the economics of all of this. These studies (and studies of studies) abound because they provide a way for academics and accountants to show their worth. Fact is, it doesn't matter what the aggregate cost of absenteeism, or chatting and the watercooler, or surfing the net is. The only thing that matters is whether any of these things are costing your group productivity. If they are, then the only thing that matters is fixing the problem. The cost, run out to several decimal places, is truly irrelevant.