Absenteeism, productivity, and workplace well-being : a prevalence–cost approach

Bourke, Jane and Roper, Stephen and Leka, Stavroula and Wishart, Maria and Belt, Vicki and Hassard, Juliet and Thomson, Louise and Blake, Holly (2026) Absenteeism, productivity, and workplace well-being : a prevalence–cost approach. Applied Economics. pp. 1-18. ISSN 0003-6846

Abstract

Poor employee mental health and well-being impose significant costs on employers, not only through lost productivity but also via broader organizational disruption. Drawing on the concept of the ‘absence multiplier’, we argue that the true economic burden of mental health-related absenteeism is often underestimated. This paper develops and tests a prevalence – cost framework in which firms’ adoption of workplace well-being practices (WWPs) is modelled as a strategic investment decision influenced by both the prevalence of mental health-related absence and the marginal productivity costs it causes. Using longitudinal survey data from 5420 UK firms (2020–2024), we estimate random-effects Poisson models of WWP adoption across preventative, employee-centred, and treatment-focused categories. Results show that firms affected by mental health-related absenteeism adopt significantly more WWPs, and that higher productivity levels encourage the adoption of employee-centred and treatment-focused strategies. Firm size moderates both relationships, with larger firms exhibiting stronger responses than smaller ones. By framing WWPs within firms’ cost – benefit decision-making, our study enhances the economics of workplace health by reinterpreting well-being investments as strategic responses to productivity risks, providing both theoretical and policy-relevant insights.