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News : Irish Last Updated: Apr 24, 2009 - 5:31:05 PM

Report by the Irish Small Firms Association says small businesses in Ireland lose on average €793 million per annum through absenteeism
By Finfacts Team
Aug 26, 2008 - 5:40:23 AM

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A new report by the Irish Small Firms Association has shown that small businesses in Ireland lose on average €793* 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. The number of firms polled wasn't disclosed.

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 3.5% or 8 working days. For large firms this rises to 4.6% or 10 working days. For small firms the average falls to 2.8% or 6 working days.

In cash terms, absenteeism costs small businesses with sick pay schemes an estimated €793 million per annum, based on average earnings of €149 per day / €37,400 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.

A recent survey by Barclays Bank in the UK, found that companies with fewer than 250 employees are fiercely loyal to their workforce.

A survey of 500 owners of small and medium-sized enterprises (SMEs) found that 29 per cent had someone on their payroll who had been with the company for at least 10 years. Two thirds still employed their first recruit.

The study also unearthed differences according to the gender and personal life of the business owner. On average, male bosses employed their first recruit for an average of a year longer than female company heads.

Bosses who have been in a relationship for more than 20 years on average employed staff for 50 per cent longer than those who were either single or had not been attached for so long.

“Back pain/injury and stress are the most commonly cited problems on medical certs”, stated McNally. “Employers should ensure that they are fulfilling their duty of care to their employees by including manual handling and stress when conducting risk assessments as part of their review of their Health & Safety Statements.”

“A substantial portion of back injury can be prevented by an effective control program and ergonomic design of work tasks. Controls could include: correct training in regard to lifting techniques; reduction in the size or weight of objects being lifted; adjusting the height of pallets/shelving and the installation of mechanical aids or automated materials handling equipment.”

McNally added, “it is a concern that stress remains one of the high reasons for absenteeism, as aside from the employees’ absence, 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”. Firms should implement 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”, commented McNally.

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 do this are more likely to see a decrease.

The survey also showed that most absenteeism occurred in contact centres, which averaged 14 days (6.1%), followed by the metals/engineering sector at 11 days (5.1%). 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, Cork and the South-East fair badly, with the average in the Cork region being 11 days (4.9%) and the South-East being 9 days (3.9%).

McNally concluded, “there is an increasing 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.”

*CSO Quarterly National Household Survey, November 2007, total employment = 2,138,900
Public Sector Employment & Earnings, CSO, September 2007 = 363,900
Implies private sector employment = 1,775,000
Small Firms, i.e. those employing less than 50 employees account for approximately 50% of all private sector employment = 887,500.
Average 6 days absence per employee per annum in small business = 5,325,000 days lost.
Average industrial earnings = €748 per week (daily rate approx €149).
Total Cost = €793 million.

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