Total employment in the UK reached 31.05 million by February 2015, representing annual growth of 1.8%. The majority of employees work in the private sector, which accounts for 83% of all employment. The influence of the private sector has increased further since 2011 due to the spending cuts and wage increase caps implemented in the public sector.

Figure 1: UK Employment, 2014

(% of Total)

Source: MBD analysis of ONS data

In 2014, the UK occupational health market is estimated to have grown by 3.7% to £728 million. Companies are demonstrating varied performances in the sector. The largest companies have typically seen occupational health turnover stagnate or decline, reflecting their exposure to the public sector, where both costs and manpower are coming under increasing pressure. All components of the sector grew over the last five years, but outsourced specialist OH providers accounted for the majority of growth - increasing by an estimated 17%, or £51 million, over the review period.

Figure 2: UK Market Segmentation for Occupational Health Provision at Salary Costs for Non-Commercial Operators, by Type of Provider, 2010-14

(£ Million)

Source: MBD and trade estimates

Supply of staff members remains low, which is likely to have beneficial effects on margins as demand increases. However, the lack of qualified professionals also presents the threat of current capacity levels being completely stretched by demand levels, which has encouraged some providers to ‘de-skill’ much of the basic work necessary to nurses.

According to HSE data, the average number of days taken off from work for illness declined year-on-year between 2009 and 2013. This applied to each age group, excluding a 5% rise for 16-24-year-olds and a 6% rise for 45 to 54-year-olds. There is strong evidence that the average number of days taken ill increases with age, from 0.41 days for 16 to 24-year-olds to 1.48 days for the over-55s in 2013/14. Women also take more days off than men across all age groups - 1.04 days for women compared to 0.9 days for men in 2013/14.

The average annual cost of absence per employee per year fell by 12% between 2010 and 2014, from £693 to £609 in all organisations, though there was an increase of £14 per employee from £595 in 2013. Despite the general fall in absence costs, both the public sector and non-profit organisations experienced a rise in costs over the same period - from £862 to £914 in the public sector and from £581 to £611 in non-profits. The decline in overall absence costs has been mainly caused by declining absence rates in the UK.

Figure 3: Average Annual Cost of Absence, 2010-14

(per employee per year, by sector, in £)

Source: MBD analysis of CIPD data

The HSE estimates that the total cost to society of workplace absence fell by just less than 13% between 2006 and 2013, after a £0.4 billion rise from 2010/11 to 2013/14. This has largely been caused by a reduction in accidents around the workplace, though the increasing incidence of musculoskeletal and mental health problems have posed new challenges in reducing absence costs.

Figure 4: Analysis of Cost of Workplace Illness and Injury, by Cost Bearer, 2006/07-2013/14

(£ Billion)

Source: MBD analysis of HSE data

According to the latest CIPD survey in 2014, 33% of organisations noticed an increase in people going into work ill over the last 12 months. This is down from 34% in 2013, but the same percentage as reported in 2011. Organisations expecting redundancies in the coming six months were nearly twice as likely to report an increase in people coming to work ill at 49%, compared to 24% of firms not expecting to make any redundancies.

According to Public Health England forecasts, England will be 35% less active in 2030 than in 1961, which will increase the incidence rate of type two diabetes, heart attacks, strokes, cancers and other weight-related diseases. The same forecast modelling shows that reducing obesity to 1993 levels could prevent 1.8 million incidences of type two diabetes, 1.7 million cases of high blood pressure, 638,000 heart attacks, 371,000 strokes, 348,000 cancers and 25,000 cases of osteoarthritis, between now and 2034.

The national launch of the Fit for Work service from May 2015 will provide access to OH via an advice line and an assessment for those out of work for longer than four weeks. This should help change the perception of OH in healthcare and the labour market. However, the success of the FfW service will depend on how well the new service dovetails with existing in-house or outsourced services, such as OH departments; and cover products, such as group income protection and PMI, which may also offer support to employees. The service is expected to require up to 740 OH professionals, 10 physicians and around 1,300 other full-time professionals. It will cost up to £50 million, but is expected to generate significant benefits for the government by increasing tax and national insurance revenues and reducing benefit expenditure. It will also offer savings of up to £165 million for employers, while economic output is estimated to increase by £450 million to £900 million.

Finding the true cost of sickness absence in the workplace is a complex science. Studies put the figure anywhere between 2% and 35% of annual salary costs. Most organisations base figures only on the wages of individuals on sick leave, excluding other factors from calculations, including the time taken to manage the absence process, particularly when dealing with long-term sickness absence. Businesses also face costs from the growing phenomenon of ‘presenteeism’, with the Centre for Mental Health calculating that presenteeism based on psychological health problems alone costs the UK economy £15.1 billion a year.

Over the next two decades, the population in England is predicted to grow by eight million to just more than 61 million. By 2032, life expectancy is expected to rise to 83 years for men and 87 years for women. Healthy life expectancy is also growing at a similar rate, implying that the additional years will not be years of ill health. It is estimated that by 2030, around 40% of the UK’s working age population will have at least one chronic and work-limiting health condition. For the over-50s in 2014, this figure was already at 42%. Chronic conditions can involve constant pain or disabling and distressing levels of fatigue, which can disrupt independent living, attendance at work, productivity and career prospects.

There has been a substantial decline over the past two decades in the number of suitably-qualified OH physicians. According to the Nursing and Midwifery Council, there were 3,461 registered OH nurses in the UK in May 2014, slightly more than the 3,447 in 2011. OH nurses are often bought in by employers to meet legal requirements, especially when businesses are becoming cost-efficient and want as much value from services as possible. However, this can belittle the work of OH nurses, and some are being put off from entering the OH sector in the fear of losing their nursing identity, such as being tied to at a desk instead of actively engaging with the workforce and solving problems.

The industry has benefited from the decline of industries, such as coal mining, metal manufacturing and heavy engineering, and the growth of employment in the less hazardous services sector over the past few decades. This transition, coupled with the success of measures to control the most hazardous exposures and activities that still occur in the workplace, has led to a reduced emphasis on health protection and more attention on the assessment of fitness for employment and the management of incapacity for work.

In July 2014, it was announced that Health Management Ltd had been appointed to deliver the government’s Health and Work Service, renamed Fit for Work and due to be rolled out by late 2015. This announcement was welcomed by the industry as the company is well-known and SEQOHS-accredited.

By applying salary rates to the costs of in-house providers, MBD has estimated that 48% of the market for occupational health was accounted for by outsourced companies, 29% by in-house corporate providers, 16% by the NHS and a further 7% by other government services.

By 2013, only half of the companies profiled in this report were profitable. BUPA Occupational Health generated the highest turnover for OH services alone at £39 billion in 2013, but made a loss in each year over the review period.

Half of the profiled companies were profitable in 2013, while four companies (AXA, Bupa, Capita and Occupational Health Care Limited) posted losses in at least four years of the review period.

Over the last year, 71% of all respondents had a health issue, with a significant proportion (43%) suffering from a minor illness, such as a cold or headache.

Female respondents aged 16 to 34 years old were more than twice as likely as their male counterparts to have experienced mental ill-health over the last year (19% compared to 9%).

The most common workplace health initiatives or benefits offered are more than 20 days in annual holiday (67% of all companies); having a pension scheme in place (65%); and sick pay for a specified amount of time (64%).

The increasing incidence of stress and back pain in the workplace has been ignored by a significant number of companies. 46% of survey respondents had not been offered a work area assessment or adjustment, while 58% had not been given access to stress management support or advice. However, later findings in the survey suggest that workers may not demand these initiatives.

Four health initiatives came out on top when respondents were asked which they would like to have at work. Two-thirds of respondents ranked more than 20 days holiday as important, while 65% cited flexible working hours, 63% sick pay and 62% a pension scheme.

Only 17% of respondents would include stress management support or advice and work area assessments and adjustments into an individually tailored wellbeing programme. This is surprising given the adjudged rise in stress, musculoskeletal and back problems in the workplace.

Due to the economic climate affecting uptake of occupational health services, the market can only benefit from the expected increases in economic growth over the next few years - aided by the boost to overall business confidence. MBD forecasts that the market will grow by 4.4% in 2015, disrupted by the general election and a lack of new policy/regulatory action. This is expected to be followed by a 4.6% increase in 2016, when ‘teething’ issues involving the national roll-out of the Fit for Work service in 2015 should have been solved, with the programme expected to largely positively impact the development of the market. OH market value is predicted to increase by a five-year peak of 5.2% in 2017, before growth will slow over the final two years of the forecast period to 5.1% and 4.7% as the impact of the FfW service in its current 2015 form will have reached full capacity. Overall, the market will grow by 21.1%, or £160 million, between 2015 and 2019 - an increase of 7% on the growth seen over 2010 and 2014.

According to research by MetLife Employee Benefits in March 2015, 37% of employees have considered quitting their job over the last year because of stress at work. Stress can be a silent issue, with many people simply not knowing where and how they can get help. An OECD report published in January 2014 found that mental ill-health costs the UK economy £70 billion a year, equivalent to 4.5% of GDP, through lost productivity, social benefits and healthcare payments. In a survey conducted by AXA PPP healthcare in March 2015, two-thirds of business managers believed that mental illness did not warrant time off work, highlighting the continuing stigma surrounding mental ill health in British businesses. Companies must provide targeted health solutions to these problems otherwise it will turn into an epidemic that will only continue to get worse.

The growing use of big data analytics and the number of people reporting their health issues and treatments on internet forums, social media and other health-related sites will enable the benchmarking of treatments and the sharing of which available support is most effective. OH service providers must use this growing trend to their advantage, and make the most of people becoming part of multiple, complex and fluid networks where information moves rapidly. However, careful filtering must be applied so that accurate and reliable data is gathered. Telemedicine and tele-health have the potential to become even more useful tools, providing opportunities for OH. Delivery of OH services is likely to build on existing examples of innovative communication channels, such as Skype, and the new Fit for Work service advice-line funded by the DWP.

Policy makers are starting to recognise the importance of employers in helping tackle big public health challenges, from obesity to depression, as shown by the government-led Fit for Work service. This type of service provides a strong platform for future occupational health issues. However, with an ageing workforce and the changing dynamic of workplace health issues, companies, OH providers and the government must work together to ensure that health and wellbeing programmes continue to be efficient and prevent ill-health instead of reacting after issues have become a problem. The development of the industry can only progress with an inflow of nurses or other suitably qualified professionals to provide the programmes, but this could be the sector’s greatest challenge with the NHS also requiring an increasing number of workers.