Discussion paper to Disability Working Group, Satellite Group 1
EMPLOYMENT BENEFITS, COSTS AND CONTEXTS
Sally Witcher June 2005
This paper considers the advantages of disabled people being in employment, to the economy in general, to employers and to disabled people themselves. It aims to provide some raw material from which to build a case for action, or cases targeted at different audiences. To be persuasive, a case needs to acknowledge facts, objectives, starting points, etc and promote positive arguments in that context.
1. The Economy
Context
The Scottish economy faces a decline in the work-age population, by an estimated 8% from 3.15 million in 2002 to 2.88 million in 2027, while the pension-age population is expected to increase by 25% (or 45% is you don't allow for the increase in female pensionable age) in the same period. This means demands on workers will increase and employers will face increased competition for workers.
Scotland has poor health by UK and European standards and high levels of inequality in terms of health outcomes for different socio economic groups. Around 350,000 Scots currently claim sickness and/or disability benefits, of which 285,000 claim Incapacity Benefit. 45 per cent of these people have been on Incapacity Benefit for 5 years or more and the highest concentrations of claimants are found in some of our most disadvantaged communities. Scotland has the lowest employment rate for disabled people of working age of all the regions of the UK (Scottish Executive, 2004).
Across developed economies, variation in the employment rates of disabled people is correlated with that of non-disabled people. However, the UK is unusual compared to other European Union economies in that, it has relatively high rates of employment across the general population, but this is not passed on to disabled people. The contrast in the UK between overall and disability employment rates is particularly marked (Prime Minister's Strategy Unit (PMSU) 2004 - see p126).
Benefits to the economy of employing disabled people
There is no good reason whatsoever why disabled people should be cast as a drain on the economy when they could be contributing to it, if attitudes to employing disabled people change and reasonable adjustments to the workplace are made. There are around 1 million disabled people in Britain who are out of work but want to work. The removal of disabling barriers and provision of support to make disabled people's contribution possible should therefore be seen as a form of social investment (Morris 2005).
If the economy is to grow, it needs to access new sources of labour. Failure to employ disabled people is exacerbating skills shortages, which is imposing a cost on the economy. A fifth of job vacancies in England stay unfilled because there is a shortage of skilled applicants. 2.4 million people in employment - 11% of the national workforce - are considered by their bosses not to be up to their jobs. (PMSU 2004, p132).
Taxpayers face higher bills because when people are not given the chance to realise their ambition to work, they cannot contribute to Income Tax and National Insurance (DWP 2005). Furthermore, the cost of not enabling disabled people to make a contribution through paid employment runs into several billion pounds. The total cost of mental health problems in lost output in the economy is £23.1 billion caused by people being unable to work (paid and unpaid). There are similar findings for the cost of blindness, which put the costs of lost output in the economy at around £2-4bn (PMSU 2004, p.130).
To increase the employment rate of disabled people would mean savings on Incapacity Benefit (IB) expenditure (although this may need to be offset against any increase in expenditure incurred to support disabled people in work). Spending on
IB has been falling since its peak of 7.7bn (2002 prices) in 1994/94, but spending on Income Support (Disability Premium) continues to increase (PMSU 2004, p131)
There is strong evidence of the health benefits of working, and of the health problems caused by long term unemployment. Increasing the number of disabled people in work should mean savings to the
NHS.
2. Employers
Context
Many employers, particularly small and medium-sized enterprises work in highly competitive markets under continual pressure to cut costs (Scottish Executive 2004). Therefore they may not see as a top priority the need to take action to promote disabled people's employment, or the health of their workforce more generally.
Employers can be divided into sectors (private/ commercial, statutory and voluntary), by size (micro, small, medium and large), by their area or type of operation (manufacturing, service providers of different types, etc) and by geographical location (rural, urban). In each case, there may be different constraints, support needs, and scope to make adjustments. Most adjustments are more commonly reported in larger workplaces. There can be particular challenges for small to medium size enterprises (SMEs). These make up 99% of private sector business and employ 57% of Scotland's workforce. The Federation of Small Businesses says that providing full disabled access has significant cost implications for
SMEs, and there may be less economies of scale to be derived from adjustments. But despite potential cost issues, it is estimated that SMEs employ around 80% of the disabled people in employment. It is thought smaller businesses have a better record for retaining employees who become disabled (PMSU 2004, p142).
Under Disability Discrimination legislation, employers are obliged to make 'reasonable adjustments' to help disabled people enter or remain in work. But ignorance is rife among employers, with 45% not recognising what constitutes a 'reasonable workplace adjustment'. On the other hand, around 65% make adjustments without knowing they are doing so! A significant number of employers are unaware of the costs of adjustments and unable to even make an estimate. (PMSU 2004, p2136). Employers also have to comply with Health and Safety legislation.
The evidence base on the costs and benefits of providing Vocational Rehabilitation is 'sparse'.
DWP is 'currently commissioning' research into the costs and benefits to employers of employing people with health conditions and/ or impairments (DWP 2004).
Benefits to employers of employing disabled people
a) Disabled people make just as good employees as anyone else. Many companies already benefit from the skills and capabilities of disabled people. Over half a million disabled people are already contributing to the bottom line in small businesses
b) There are financial gains to be made by ensuring that products and services meet the needs and aspirations of a diverse customer base appropriately. Disabled employees can help businesses diversify, identify new markets and attract disabled customers. Disabled people have an estimated annual spending power of £45-50bn. (PMSU 2004, p138). However, according to the
DRC, a
DWP press release in 2004 put the figure even higher at £80 billion per year (DRC 2005).
c) Many disabled people will require none or minimal adjustments (PMSU 2004). If adjustments are required, support may be available under the Access to Work scheme.
d) To live with a disability can mean you have to develop good organizational skills and become adept at finding innovative, creative solutions to problems. Many disabled people have transferable problem-solving skills that employers value highly (PMSU 2004, p138)
e) Keeping an employee who becomes ill or disabled at work generally costs less than having to recruit and train someone new -
DTI estimate it costs £4,000 to recruit a new worker (PMSU 2004, p138)
f) You may already be employing disabled people, even if you don't know it!
g) There is increasing evidence that a broader, more integrated approach to employee health can result in cost savings, higher levels of productivity, improved morale and lower turnover amongst employees (Scottish Executive 2004).
h) Failure to help people with a health condition and/or impairment to get back to work may result in significant costs to employers. For example, the CBI estimates that sickness absence costs in the UK are about £11 billion per annum with over £3 billion attributed to long term sickness. The Work Foundation estimates the costs at £12.9 billion. (DWP 2004, p21)
i) There are many practical, uncostly actions that employers can take to open up access to disabled people, retain staff who become disabled and promote the good health of their workforce in general. Advice is available from a variety of sources, including Jobcentre Plus, the Employers Forum on Disability,
j) For all kinds of reasons (ethical, financial, PR), no company would want to fall foul of anti-discrimination legislation. But companies increasingly believe that recruiting disabled people is 'the right thing to do' for ethical reasons. Private sector companies may produce 'Corporate Social Responsibility' reports, with targets and actions on employing disabled staff and reaching disabled customers.
3. Disabled people
Context
In 2003 there were 662,000 working age disabled people in Scotland (21% of the total working age population). The employment rate for disabled people was 45% and for non-disabled people it was 82 per cent (Scottish Executive 2004b). 185,200 were in receipt of Incapacity Benefit (Riddell et al 2005). Fifty-eight per cent of disabled people (with or without a long-term illness) have no qualifications compared to 24 per cent of non-disabled people (DRC 2005).
Nine out of ten people who move onto incapacity benefit hope to move back into employment and disabled people who are economically inactive are just as likely to want to work as non-disabled people (PMSU 2004, pp. 128-129). But 40% of those who start claiming IB will still be unemployed a year later and only one in five of these will then find work within five years. In Scotland, 47% of claimants had been getting IB for more than 5 years in 2003 (Scottish Executive 2004b)
Disabled people who want to work cite various obstacles, including the nature of their impairment, low confidence, limited job opportunities of the right type, difficulties caused by coming off benefit, expectations of discrimination, inadequate transport (PMSU 2004, p129). Almost a quarter of disabled people say they have experienced actual discrimination in the workplace, of which 70 percent is specifically disability-related (PMSU 2004, p135)
Upon entering employment, a significant number of disability
benefit recipients experience a loss, or no change in income.
Very few of those working 16 hours a week experience gains of more than £40 a week by working. Around half of those entering work for 30 hours a week experience gains of more than £40 a week (so around half gain less than £40 a week) (PMSU 2004, p145)
Benefits of employment for disabled people
Financial gains: they may be small, but still represent a significant proportional increase in a low income. But financial security is also a factor.
Health benefits: The best clinical management for back pain is to continue an active life, rather than waiting until pain disappears completely. This will mean a faster recovery and fewer long-term problems. An early return to work is now considered a major objective of cardiac rehabilitation for most people of working age and is seen as supportive of long-term recovery. With appropriate support, people with mental health conditions can get back to work - working will aid confidence, motivation and future health and is likely to be a key aim for most individuals (DWP 2005).
However,
GPs and other professionals may need support to change their attitudes towards disabled people working. And work can bring health risks as well as benefits. Up to 16 per cent of Accident and Emergency attendees in Scotland have work related health problems whilst the Labour Force Survey noted that 6 per cent of workers have had health problems caused by or made worse by their work. Health and safety failures are estimated to cost around £0.5 billion every year. New ways of working have brought new risks in terms of problems associated with visual and keyboard ergonomics, information overload, and pressures on the work-life balance (Scottish Executive 2004)
Intangible benefits: These include
increases in self-esteem and confidence, access to new social networks, greater independence and inclusion.
References and information sources
Many of the following documents bring together lots of research evidence. Please refer to them, where indicated, for further information on the source of particular points or figures.