This report will explore the following key questions with regard to occupational health in the UK:

• What are the key determinants driving the occupational health industry?

• Was the industry affected by the financial crisis and the slow recovery? If so, how has it developed and changed since?

• How have government schemes influenced market demand and supply?

• How has the provision of occupational health services changed over recent times?

• What are the key issues the industry needs to address to expand its service?

• What does the future hold for occupational health services?

This report covers the UK occupational health market. Occupational health is defined as healthcare provision provided in the workplace, and includes both specific health and safety care, and broader issues of health, fitness and preventative health care, often referred to as wellness. There remains much debate and confusion over the precise definition of occupational healthcare, and the boundaries of the sector remain vague. According to the joint International Labour Organisation/World Health Organisation Committee on Occupational Health, occupational healthcare is aimed at the following:

“The promotion and maintenance of the highest degree of physical, mental and social wellbeing of workers in all occupations; the prevention amongst workers of departures from health caused by their working conditions; the protection of workers in their employment from risks resulting from factors adverse to health; and the placing and maintenance of the worker in an occupational environment adapted to his/her physiological and psychological capabilities.”

The Health and Safety Executive (HSE) suggests “The term 'occupational health' conveys different things to different people. For some, it means simply the prevention and treatment of illness that is directly related to work, in which health education has no place. Others will emphasise fitness for work issues separately from health and safety. However the impact of any sickness absence on SMEs and their employees does not brook such fine distinctions. In those terms, it is of little importance whether the sickness is the result of an accident at work, long-term exposure to risk, or the conflicting demands of home and work. Only a holistic approach can make a difference to health inequalities.”

The HSE reports that occupational health can embrace:

• The effect of work on health, whether through sudden injury or long-term exposure to agents with latent effects on health; and the prevention of occupational disease through techniques, such as health surveillance, ergonomics, and effective human resource management systems;

• The effect of health on work, bearing in mind that good occupational health practice should address the fitness of the task for the worker, not the fitness of the worker for the task alone;

• Rehabilitation and recovery programmes;

• Helping the disabled secure and retain work;

• Managing work-related aspects of illness with potentially multi-factorial causes, such as musculoskeletal disorders and coronary heart disease, and helping workers make informed choices regarding lifestyle issues.

The CIPD defines occupational health as:

“Occupational health is a specialist branch of medicine focussing on health in the workplace. It is concerned with the physical and mental wellbeing of employees. Occupational health specialists can support organisations through advising on workrelated illnesses and accidents, carrying out medicals for new starters and existing employees, and monitoring the health of employees.

Occupational health services are also used to assist organisations in managing absence situations – both short and long term. The opinion of an occupational health specialist might be crucial in determining how to manage a capability issue, and can be key evidence in a claim to an employment tribunal.

Only large organisations are likely to employ their own occupational health specialists. Most organisations will contact an external provider of occupational health services as and when they need it. In some organisations there will be an employed full-time nurse who has training in occupational health. This might be supported by a parttime doctor who comes to the organisation to carry out medicals and other assessments. Other organisations, particularly those working in hazardous areas, are more likely to employ their own doctor.

The level of provision is likely to be determined by the size of the organisation and the nature of the operation. An organisation that operates in a particularly hazardous area is clearly likely to need more occupational health support than other organisations.

The interaction of employees with occupational health will largely depend on the presence of the service. If there is a full-time service on site then employees are more likely to make adhoc use than if the service is only available at specified times. It is important that employees are clear about the nature of the service, and see the distinction between what is offered by occupational health and what they should refer to their own GP.”

As well as addressing issues that occur, occupational health services should also be proactive, aiming to reduce potential problems in the workplace. The activities of occupational health are therefore likely to include:

• Implementing policy

• Ensuring compliance with health and safety regulations

• Minimising and eliminating hazards

• Dealing with cases of drug and alcohol abuse, and advising on HIV/AIDS issues

• Offering pre-employment health assessment

• Maintaining relations with appropriate bodies and individuals

• Monitoring the health of employees after an accident, illness, and during and after pregnancy

• Managing clinic facilities, basic health checks and first aid

• Advising on medical severance and ill-health retirement

• Advising on ergonomic issues and workplace design

• Promoting good health education programmes

• Promoting healthy eating

• Monitoring symptoms of work-related stress

• Providing advice and counselling

• Working with special needs groups

The occupational health service will be provided by a diverse range of practitioners, including physicians, hygienists, psychologists, ergonomic experts and occupational health nurses.

Occupational health is likely to work closely with HR and those responsible for health and safety in organisations. However, for occupational health to have the greatest impact, it is important that line managers feel able to approach occupational health advisers to discuss any concerns or issues.

Some table values do not sum due to rounding methods.

The term billion is used to represent one thousand million.

All values are at current prices, except in the forecast section, which are quoted at constant 2014 prices.

MBD publishes a range of reports on the UK healthcare market. The trends in the private healthcare market are analysed in detail in the UK Private Healthcare Market Development.

Reports are researched and written by MBD’s in-house, specialist business-to-business consultants. Research is based on both an analysis of official information and on original, trade research, providing both a quantitative and qualitative view of the market. MBD’s unique range of frequently updated reports provide an integrated body of ongoing research, enabling deep understanding of the prevailing trends and the drivers of these trends based on trade opinion.

The following abbreviations appear in this report:

Occupational health deals with work-related health issues, assessing and advising on the impact work has on employees’ health, and the effect employees’ health has on work. The HSE states that good occupational health services are central to the effective management of workplace health.

With more than 31 million people working in the UK, workplaces provide an ideal opportunity for health providers to reach millions of people and encourage them to improve health and wellbeing both at work and in their general lives.

Occupational health was excluded from the NHS’ main objectives when it was first established as the protection of workers was considered a responsibility of employers. As a consequence, OH service provision in the UK has been less coordinated and less comprehensive than most other areas of healthcare, which explains the marginal commercial-led increases in the sector’s value over recent times.

Providers of occupational health can be individual doctors or nurses providing a service either inhouse or to various local organisations, or companies employing occupational health practitioners on a wider regional or national basis.

WHO’s healthy workplace model portrays a healthy workplace as “one in which workers and managers collaborate to use a continual improvement process to protect and promote the health, safety and wellbeing of all workers and the sustainability of the workplace” by considering four linked areas:

• Health and safety concerns of the physical work environment;

• Health, safety and wellbeing concerns in the psycho-social work environment, including work organisation and workplace culture;

• Personal health resources in the workplace; and

• Ways of participating in the community to improve the health of workers, their families, and members of the community.

The UK benefits from a nationalised health care system with universal access. This has many advantages as interventions can be developed to use the resources available through the state. On the other hand, the public health system removes some of the private economic incentives for employees to initiate interventions. This is because some of the costs of employee illness are borne by society rather than by the firm, such as the costs linked to private medical insurance paid by firms in the US.

Many businesses still view occupational health as an uncertain investment in improving business performance. At times, OH services are delivered in an ad-hoc fashion, with little or no consideration to the specific needs of individuals in the sectors they work. However, the case for investing in OH has never been greater. An OECD report from February 2014 found that mental ill-health costs the UK economy £70 billion a year, or 4.5% of GDP, in lost productivity at work, benefit payments, and healthcare expenditure.

The demographics of the UK labour force are changing, with the working population ageing and working until later in life. There are also more employees with long-standing health problems or disabilities that pose an organisational productivity issue and a burden on society due to increased healthcare costs, welfare payments, reductions in income tax receipts, and increased sickness absence.

A number of recent policy documents and practical initiatives from government, such as the Fit Note, have highlighted the importance of tackling employee ill-health. Recent trends suggest that these have been successful, with a fall in sickness absence and work-related accidents and injuries, and improvements in staff turnover and employee satisfaction all reported.

The latest UK personal well-being estimates, released by the ONS in September 2015, showed small but significant improvements since the first report was published in 2011. This is fairly noteworthy in occupational health as employed people rated their overall well-being higher than the UK average for all positive measures of personal well-being, from life satisfaction, to happiness, and anxiety. This implies that the increased provision of occupational health services may be having an impact on the workplace.

According to the latest Labour Force Survey, which was updated by the HSE in October 2015, an estimated 23.3 million days were lost in 2014/15 due to illness caused or made worse by an employee’s current or most recent job in the UK. This signals a slight improvement on the estimate for 2013/14, which suggested that 23.6 million days were lost.

Since the start of the recession, the UK’s labour productivity has fallen and remained close to the rate recorded at the start of 2008. Historically, productivity increased by around 2% per year, but by Q3 2015, productivity had increased by only 0.7% above the pre-recession peak.

Internationally, UK productivity was 18 percentage points below the average of G7 countries by the end of 2014 - the widest productivity gap since 1991 when the ONS started recording data. Some industry leaders believe that productivity could be improved by ensuring that organisations have suitable OH services and programmes in place, which would increase output levels due to employees working in the most ideal conditions.

The latest EU-OSHA European Survey of Enterprises on New and Emerging Risks (ESENER) revealed that 29.7% of UK employees used an occupational health doctor in 2014, compared to the EU average of 68.3%.

The last sickness absence report, published in the ONS’ Labour Force Survey in September 2014, found that the time lost to sickness absence equated to 2% of all available working time (based on 7.5 hours working days) in 2013/14, equivalent to 4.4 days per year for each worker. at an overall estimated £32 billion cost to the economy.

Table highlights:

• The number of days lost due to sickness fell year-on-year over the majority of the five-year review period. The largest decline was seen in 2010, when the number of days lost fell by nine million (6%).

• Despite the increase in the total number of days lost due to sickness in 2012, both the percentage of working hours lost and the average number of days lost per worker remained the same, at 2.1% and 4.5 days respectively.

Figure 10: Sickness absence among UK employees, 2009-2013 (Millions)

Source: MBD Analysis of Labour Force Survey data

Levels of sickness absence vary with a number of factors and characteristics, including age, gender, skill and wage level, sector, size of firm, sick pay regimes (payment of occupational sick pay), and the existence of a trade union. Higher sickness absence is generally associated with the factors and characteristics below:

• Older workers

• Women

• Those with a longterm health condition

• The public sector

• Larger firms

• Public administration and health/social work sectors

• The existence of a trade union

• Part-time workers

In March 2008, Dame Carol Black published ‘Working for a healthier tomorrow’ - a review of the health of the working age population. The review highlighted the need for “forward-thinking professional leadership”, which can only be achieved by expanding the remit of occupational health to include all those of working age, and working with other specialities (both medical and non-medical). The Labour government duly responded in November 2008 by publishing its own report entitled ‘Improving health and work: changing lives’.

However, the general election in 2010 and the formation of a new coalition government led to the launch of another report aided by Dame Carol Black and David Frost. ‘Health at work - an independent review of sickness absence’ was published in November 2011, assessing the system for managing sickness absence and highlighting any market failures or problems of unaligned incentives. It noted that a significant number of absences last longer than necessary and that 300,000 people fall out of work onto health-related state benefits each year.

Since this review, there has not been a comprehensive statistical survey on the incidence of sickness absence among employees by a government body.

However, the Chartered Institute of Personnel and Development (CIPD) produces an annual report that includes a survey, using a select number of respondents, on UK absence management in the workplace. Findings for the average working time lost and average days lost per employee per year are shown below:

Table highlights:

• Respondents employed in the non-manual sector recorded lower average working time lost per year (2.2%) and lower average days lost per employee per year (4.9 days) than those working in the manual sector.

Figure 12: Average level of employee absence, by sector, 2015, (Average working time lost (%) and average days lost per employee per year)

Source: MBD analysis of CIPD Annual Survey Report 2015

The driving force behind the commercial development of the sector has undoubtedly been public sector demand for these services. Absenteeism in the public sector has traditionally been relatively high compared with the private sector, both in incidence and length. However, sickness absence rates have declined more strongly in the public sector than the private sector over the last decade so the gap is narrowing.

The state of the economy is an important factor affecting the occupational health market. There is greater propensity to invest in apparently non-critical human resources during periods of economic growth.

During more uncertain times, such as the recent economic climate, there is a tendency to reduce non-critical spending at an early stage. This reflects concern among companies not to be seen spending on non-critical issues when the threat of job losses is high. There is also evidence that companies are more concerned about the quantity of employment over the quality of conditions for existing employees, as this often has greater impact on public image.

While government statistics indicate growth in employment, uncertainty about the longevity of the economic recovery has not enhanced job security to the expected level. A leading factor in the decline in unemployment has been the increase in self-employed and part-time workers, which has made the provision of occupational healthcare even tougher, as it is a very difficult sector for the industry to pinpoint and target.

There also remains debate over the intangible benefits provided by occupational health, such as improved morale.

Many companies continue to understate the cost of absenteeism, in terms of replacement, retraining, loss of productivity, and the impact on remaining staff. None of these factors contributed to the July 2014 PricewaterhouseCoopers (PwC) estimate that sick days cost UK employers £23 billion a year, down from £29 billion in 2013.

A further cost-benefit study undertaken by PwC, commissioned by the DWP, found that the most modest figure for the return on investment from OH services and wellness programmes was £2.50 for every pound spent.

However, some studies have found that the benefits of health initiatives are minimal, so the true cost-benefit analysis of occupational health will remain uncertain until more accurate costings are established.

The International Commission on Occupational Health (ICOH) summarised the principles of OH ethics (last updated in 2014), on which the ‘International Code of Ethics for Occupational Health Professionals’ is based on, into three basic principles:

• The purpose of occupational health is to serve the protection and promotion of the physical and mental health and social well-being of the workers, individually and collectively. Occupational health practice must be performed according to the highest professional standards and ethical principles. OH professionals must also contribute to environmental and community health.

• The duties of occupational health professionals include protecting the life and the health of the worker, respecting human dignity, and promoting the highest ethical principles in OH policies and programmes. Integrity in professional conduct, impartiality, and the protection of the confidentiality of health data and privacy of workers are part of these duties.

• Occupational health professionals are experts who must enjoy full professional independence in the execution of their functions. They must acquire and maintain the competence necessary for their duties and require conditions that allow them to carry out their tasks according to good practice and professional ethics.

There is a shift towards promoting occupational health provision as good business practice, providing a greater pull factor to demand. The greater emphasis on the service economy and re-skilling of the workforce has helped turn attention to human resources.

Consequently, the provision of occupational health is seen as attractive to employees, helping reduce absenteeism and improve morale. However, the Health and Safety Commission recognises that the willingness and ability of the corporate sector to take responsibility for occupational health has been hindered by the long-term decline of large manufacturing and the rise in medium and small-sized corporations.

Policy makers are also starting to recognise the importance of employers in helping tackle big public health challenges, from obesity to depression, as increasing industrialisation and urbanisation have led to less healthy diets and lifestyles, which will further increase the reach of preventable conditions.

A Council for Work & Health report in 2014 claimed that SMEs accounted for 99.9% of all private sector businesses in the UK, while only 10% small employers provided employees with access to OH services compared with 80% of large employers.