Impact of Disability

The Impact of Disability in Canada

An accident at home, at work or at play or a diagnosis of a serious or chronic illness can change a person’s life in a moment. At any given time, 8% to 12% of the workforce in Canada is off work due to injury and receiving workers’ compensation, long-term disability or weekly indemnity benefits. A serious injury or illness can mean loss of income and future security, launching a downward spiral of emotional, relationship, social and financial difficulties.

The longer individuals are away from work with a disability (see definition), the less likely they are to return to employment. After one year of absence, only 20% of workers return to the job. The costs of disability are shared by the workers and their families, employers and taxpayers.

For workers and their families, a disability can mean loss of earnings and reduced pensions. For example a worker earning $50,000 a year who becomes disabled at age 35 will lose almost $400,000 in the 30 years before retirement, based on 60% long-term disability coverage. If forced onto social assistance, the cost will rise to almost $800,000. In addition to the financial impact, workers also lose the social support provided by coworkers, the sense of dignity that comes from productive work, the routine and structure work provides their daily lives, and the challenge and learning found in the workplace. Workers coping with a disability often acquire secondary disabilities such as depression, currently the leading source of disability in Canada and the world. (More on the impact of disability on workers)

The impact of disability on organizations challenges their potential to compete in the global marketplace. There were over 359,000 workers’ compensation claims filed in Canada in 2002, resulting in benefit payments of over $6 billion dollars.  Employers paid over $6.6 billion in workers’ compensation board premiums (AWCBC, 2003). Non-occupational illnesses and injuries are less easily tracked, but long term disability premiums paid by employers are estimated at over $9.1 billion. The consulting firm Watson Wyatt estimated that in 2000,  that the direct costs of insurance premiums was 7.1% of payroll.  Added to that was an additional 10% associated with indirect costs related to work absence such as administration costs and lost production.

Studies show that the costs of losing an employee and retraining a successor equals up to five times the annual salary for a professional staff member and 120% of the annual salary for a non-professional staff member. These costs are in addition to the premiums paid for workers’ compensation and group health insurance, and down time. (More on the impact of disability on organizations)

Society as a whole, bears a significant cost for disability once workers have exhausted their sick leave and/or disability benefits. While few would begrudge social assistance paid to those with disabilities, failure to return to work costs taxpayers in Canada about nine cents out of every dollar earned, or about $2,500 per working person in the country. Social assistance payments, lost tax revenues and the hidden costs of broken families take a staggering toll on our social system. (More on the impact of disability on society)

As the workforce ages, the rate of disability is likely to increase. Left unchecked, disability costs could increase dramatically.