More on the Impact of Disability on Organizations

Employers pay the largest share of the economic costs associated with disability. Studies show employers pay 35% of the total with workers and families incurring 27% of the financial cost. Some details of this economic burden include:

  • The average Canadian missed 7.2 days of work in 2001 (Statistics Canada 2002 Labour Force Historical Review).
  • Direct and indirect costs of disabled workers displaced from the workplace in BC total $3.6 billion a year and are projected to climb. About 5% of all disabling conditions in BC result in long-term disability and an extended or permanent period of work disruption. Assuming similar rates of disability across Canada, the total cost of disability in Canada would equal $36 billion (NIDMAR, 1997).
  • The indirect costs of disability include: decreased productivity while at work (presenteeism), loss of productivity related to employee absences, salaries of replacement workers plus the cost related to training and workflow disruption, overtime, decrease in customer satisfaction, medical, legal and investigation expenses (Watson Wyatt, Staying at Work, 2002/2003).
  • A study of three Canadian pulp and paper mills undertaken by PricewaterhouseCoopers found that the direct and indirect costs associated with disability-related absences contributed $4.50 to $7.25 to the total cost of producing each tonne of paper (NIDMAR, 2000).
  • Watson Wyatt, in its survey of Canadian employers in 2000, found that direct disability and absence costs are 7.1 percent of payroll. While costs of workers’ compensation declined slightly, short-term absence costs had doubled in the period between 1997 and 2000. The authors attributed part of this increase as a side effect of better management of workers’ compensation claims.
  • The indirect cost of work absence was approximately 10.2% of payroll (Watson Wyatt, 2000). Of that amount, 6.2% related to the cost of overtime and replacement workers; 4% was attributable to loss of productivity.
  • Small employers (employing fewer than 200 employees) report higher direct disability and absence costs as a percentage of payroll than medium (201 to 999 employees) or large organizations (more than 1000 employees). For these small organizations, the direct cost of disability was 7.8% of payroll (Watson Wyatt, 2000).
  • Decreased productivity while still at work is especially associated with mental health and substance abuse-related issues. In addition, these conditions may be associated with higher accident and injury rates.
  • Physical and mental disabilities are now the leading source of complaints to the New Brunswick Human Rights Commission (2002). In 2000/2001, 34% of the grievances to the HRC came from people who contended they were discriminated against on the basis of their physical or mental disability. Event those grievances that are dismissed are costly to employers due to the cost of legal assistance and gathering information to present to the commission.