Can prioritising worker health help close the North’s productivity gap?

March 3, 2020

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by Anna Round, IPPR North

  • In January, the Carnegie UK Trust and the RSA published Can Good Work Solve the Productivity Puzzle? essays featuring new research, opinion and analysis by representatives from almost 20 organisations from policy, business, trade unions and civil society. The collection sets out how a focus on good work can be encouraged to improve wellbeing by boosting good jobs and helping solve the UK’s long-standing productivity puzzle.
  • 10 years on from the landmark Marmot Review into health inequalities, this blog explores tackling poor workplace health as a means of improving individual wellbeing and productivity, and points to how local and regional government in the North East of England are rising to this challenge.

The idea that healthy workers are more productive holds an intuitive appeal for anyone who has struggled through a day’s work, paid or unpaid, with a heavy cold or a headache. Large-scale studies confirm that:

‘… The determinants of a country’s economic performance include the health status of its population. That is, there is a two-way relationship between health status and socioeconomic factors. People in good health are more productive …’[1]

Yet in the proliferating policy discussion of how to address the UK’s ‘productivity problem’, the health of workers is a relatively recent theme. Developments such as the 2018 Good Work Plan signal a new and welcome policy approach, recognising the role of health as a dimension of work quality.

The idea that we should evaluate economies in terms of their human impacts is increasingly popular. Conventional production indicators, notably GDP, provide an important but narrow picture, failing to capture how an economy is experienced by the people who live in it. Proposals for alternatives that define success by increases in wellbeing and sustainability as well as growth are gaining traction , for example in 2019 New Zealand’s first Wellbeing Budget was published.

Health is a ‘social input’ to productivity 

Will this approach to economic outputs be accompanied by a greater focus on the social inputs to prosperity, including health? The link between economic deprivation and poor health is well-established, but interest is growing in the ‘vicious circle’ by which poor health in turn makes it harder to create wealth in a place. A recent study found rates of productivity below the UK average in the North of England are due in part to poorer levels of health. Unemployment and limited employment prospects associated with ill-health and long-term conditions explain around 30% of the productivity gap between the North and the rest of England. Investment to reduce this disparity could generate over £13 billion in gross value added.

This is especially important for areas such as the North East, where poor outcomes on a range of health indicators are closely related to historically high levels of deprivation and the impacts of economic restructuring. Life expectancy at birth for both sexes is below the English average. But crucially, average healthy life expectancy at birth is the poorest in the UK – at around 60.4 for women and 59.5 for men, and several years lower than the State Pension Age. As well as contributing to economic inactivity, this trend almost certainly means that some people who stay in work, for economic or personal reasons, will perform less effectively because of poor health.

The argument for investment in health as an economic asset as well as a social one is clear:

‘… we need to reposition health as one of the primary assets of our nation, contributing to both the economy and happiness.’[2]

However, the nature of that investment – who should make it, where it should be targeted and how its benefits can be measured – is complex. In the first place, economic gains are only one of a host of reasons for investing in health services and the public health measures – the ‘compelling case’ for intervention also includes the intrinsic value of health, the role of health in social justice and potential savings in health service costs.

In addition, the productivity impacts of health vary by condition, severity and context, as well as by type of job and sector. And while absenteeism and withdrawal from the labour market are fairly straightforward categories, it is much harder to identify the effect on productivity of ‘presenteeism’ or working whilst unwell – although this may be substantial[3]. Better evidence on these issues is important, but they need to be treated with care. Recent years have seen great gains in enabling work for people with long-term health conditions and in ending the stigma associated with certain illnesses. In stressing the importance of worker health in general for productivity, we must make sure that individual employees with health issues are not seen as a potential cost to employers.

Who creates good health?

The way we talk about health is often at odds with expert knowledge of what works to improve, create and maintain it. Informal understandings tend to assume that health is shaped primarily by the individual exercise of responsibility, discipline and will, with genetic factors also playing a major role. Experts argue, however, that health creation is complex, arising through multiple interactions with places, experiences and opportunities – including work itself. Individual actions and choices to improve health take place in social and economic contexts, and are enabled or inhibited by these.

Many of those contexts can be influenced profoundly by government policy. State investment that improves the health and wellbeing of populations will also improve their opportunities for economic participation (subject, inevitably, to the structures of the local economy and labour market). A second key context is the workplace itself; after all, this is where working adults spend a large proportion of their time. Dame Carol Black identified a strong relationship between firm-level health interventions and workplace practices, and economic outcomes including productivity. Yet employer approaches to investment in the health of their workers varies considerably. Multiple examples of good practice exist alongside uncertainty about how to create, prioritise and measure employee wellbeing.

Meeting new worker health challenges

The changing nature of work, with new patterns of employment and relationships between employers and employees, may have consequences for health at work and for the effectiveness of employer investment. While more employers recognise the value, social and economic, of comprehensive changes, work insecurity is an increasing concern. Not only could precarious work make engagement with workplace health more challenging, it may itself have negative impacts for health and, in turn, for productivity. A growing evidence base, including work by IPPR; the Marmot Review 10 Years On; and new research published this week by the Carnegie UK Trust, points to significant links between employment status and poor mental health.

This could be a particular issue for certain ‘low-wage’ sectors, as well as for areas and industries that have seen a relatively large increase in insecure work. The proportion of workers on a ‘zero-hours contract’ fell in the North East between the second quarter of 2017 and the same period in 2018  but there is evidence that this region has seen increases above the UK average in other forms of non-permanent work, including temporary jobs, agency work and self-employment.

As well as supporting wider calls for investment in health creation and prevention of illness, policy responses to improving health for productivity should focus on improving information and resources for key stakeholders who hold the powers to spearhead change. Central and local government are themselves major employers and have the ‘hard and soft’ powers to manage the integration needed to embed health in different contexts, including the workplace. National examples of good practice, particularly in relation to mental health, already exist.

Many Local and Combined Authorities have embraced the Good Work agenda using existing powers and the opportunities of devolution to improve work quality and bring together partners who can both drive this agenda and benefit from it. In the North East, the Good Work Pledge by the new North of Tyne Combined Authority includes a recognition that good quality work supports both productivity and health.

Once embedded, evaluated and widely discussed, such initiatives can help to make the case for the ‘robust model for measuring and reporting on the benefits of employer investments in health and wellbeing’ envisaged by Dame Carol Black. In time they will help to reframe health at work as a project of co-creation by employers, employees and government.

 

~Notes~

  • This piece originally appeared in the Can Good Work Solve the Productivity Puzzle essay collection (for all references cited in this blog, please see p.131 of the collection). It does not reflect the view of the Carnegie UK Trust, only the view of the author.
  • The Carnegie UK Trust has been active for many years in the push to look beyond purely economic indicators to measure and value social progress. We advocate the use of wellbeing frameworks, which measure the success of society not only in terms of its material wealth but also extend to, for example, indicators on quality of work, health, the environment and our sense of security and cohesion. Solving the productivity puzzle, and unlocking the benefits in living standards this can help deliver, must be addressed within this wider need to rebalance the measures through which we understand and assess our progress.

You can read the Carnegie UK Trust’s report Race Inequality in the Workforce, exploring the relationships between employment, ethnicity and mental health, here.

[1] James, C., Devaux, M. and Sassi, F., 2017. Inclusive growth and health. OECD Working Papers No. 103. Paris: OECD. Available from: http://dx.doi.org/10.1787/93d52bcd-en

[2] Chief Medical Officer, 2018. Health 2040: better health within reach. London: Department of Health & Social Care. Available from https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/767549/Annual_report_of_the_Chief_Medical_Officer_2018_-_health_2040_-_better_health_within_reach.pdf

[3] Black C and Subel S (2020). The hidden productivity gap, Blog post, British Safety Council website. Available from https://www.britsafe.org/publications/safety-management-magazine/safety-management-magazine/2019/the-hidden-productivity-gap/