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6 Economic costs - cost to productive capacity of Scottish economy
6.1 Alcohol misuse may reduce the productive capacity of an economy thereby imposing a cost. This may be in a number of different ways. Absenteeism and presenteeism (reduced activity/productivity due to alcohol) will impact directly on employers. Forty percent of employers believe that alcohol misuse has a significant effect on both absenteeism and lost productivity 24. Unemployment and premature mortality in the working population impacts both on employers and individuals.
6.2 The economic costs have been estimated using a human capital approach. This involves applying a cost, based on average wages, to lost productive time.
6.3 Presenteeism: this is where there is a reduction in work performance /productivity by those who are at work, as a result of alcohol misuse. Survey data in 2004 25, suggest that on average, workers turn up to work two and half days a year, hungover. Workers themselves thought that they were only 73% as productive on these days. This suggests that workers lose the equivalent of an average of 0.68 days annually. In Scotland this equates to approx 1.7 million days, at a cost to business of around £200m.
6.4 Absenteeism: in 2001 across the whole UK workforce over 176m working days were lost due to sickness. Between 6 and 15% can be attributed to alcohol related illness 26. Across the UK this was estimated to cost around £1.5bn. The absenteeism estimates were based on data from Labour Market Trends and the CBI survey. In 2006, the CBI survey suggested that 175 million days across the UK were lost as a result of absenteeism at a cost of £13.4bn. Using a similar assumption, in 2006, alcohol related absenteeism, for the UK, would lie between 10.5m and 26m days lost.
6.5 Employment in Scotland represents 8.6% of UK employment. Assuming that the rate of absence and alcohol related absence has remained steady, this suggests that alcohol related absenteeism adds in the region of a further £200m. (Although if absenteeism were to be at the higher end of the range then the cost would be approx £280m)
6.6 Unemployment: the relationship between drinking and unemployment is not straightforward although there is evidence that excess drinking is negatively associated with employment 27. Data on the number of people unemployed due to alcohol misuse is not available. The 2001 study calculated that the unemployment rate, at that time, for individuals who are alcohol dependent was higher than the general population. The value of this additional unemployment was calculated as £84m. The Cabinet Office paper uses different methodology which suggests that the value of alcohol related unemployment to the Scottish economy in 2001 was more likely to be around £146m.
6.7 Data was not available to replicate the 2001 methodology. Uprating the lower figure (from this methodology) for inflation suggests that excess unemployment due to alcohol dependency costs the Scottish economy around £96m.
6.8 Premature mortality: in 2005 there were a total of 2,372 alcohol related deaths in Scotland. From 1999 (data used in 2001 report) to 2004 the number of alcohol related deaths rose 21 per cent, from 1,694 to 2,052 people. There will also be deaths indirectly attributable to alcohol.
6.9 In people of working age, premature mortality from alcohol related deaths (alcohol as the primary casual factor) accounts for approx 15500 years of working lives lost. This was calculated from the mean age of death of the 2372.
6.10 Using GRO records for cause of death indirectly liked to alcohol, in 2006, working years lost were calculated by applying alcohol attributable factors for each disease group iv identified to the number of deaths in each age group; then applying the economically active rate (0.75%) and subtracting the number of years lost from the usual retiral age of 65. In people of working age there were an additional 3300 working years lost. (This may a low estimate) This gives a total of @ 18800 years lost. The cost was calculated as the discounted stream of earnings (using average annual salary data).
6.11 The number of years was adjusted for the unemployment rate: the total estimate of loss from premature death in the working age population is £328m.
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