Lost productivity due to staff on sick leave could reach $3.3 billion a year in Singapore by 2030, according to a new study yesterday.
It found that an ageing workforce and the rising cost of healthcare are projected to drive up average medical costs per employee by 108 per cent to $1,973 per year in 2030, which represents a mounting financial burden for employers.
The segment of Singapore employees aged over 50 is projected to increase by 55 per cent, and to form 40 per cent of the workforce by 2030, according to the study by human resource consultant Mercer and Marsh & McLennan Companies' Asia-Pacific Risk Centre.
It noted that as people age, they will put increasing pressure on health services and play a major role in driving up medical costs.
"With improved management of health conditions permitting individuals to stay in the workforce longer, increasing financial needs in retirement, as well as more flexible employment options, such as working from home, and on-demand jobs in the gig economy, there is a growing trend for Singapore employees to postpone their retirement," said Mr Neil Narale, Singapore business leader for Mercer Marsh Benefits, a worker benefits and insurance consultancy.
"However, health risks increase with age, ranging from diminishing motor and sensory functions to a greater incidence of chronic diseases, which will create challenges for employers."
Ageing is estimated to drive the prevalence of chronic diseases such as cancer and diabetes by up to 200 per cent by 2030, which means Singapore will face the challenges of stagnating productivity growth through more absenteeism, for example, said the report.
Based on current trends, productivity loss due to sickness per employee is projected to increase by 25 per cent based on gross national income. With an ageing workforce, at the national level, this represents a cost of $3.3 billion by 2030, a 43 per cent increase from 2016.
$1,973 Average medical costs per employee per year in 2030, according to the study.
108% Increase in average medical costs per employee in 2030 due to an ageing workforce and rising cost of healthcare.
What is worth noting is that 60 per cent of all medical claim costs will be attributable to 10 per cent of claimants, said Mercer.
This highlights the value of interventions for high-risk groups, such as health and wellness programmes to reduce the incidence of disease and screening for earlier detection of disease, it added.
But while an ageing workforce may present challenges related to higher healthcare needs, older workers are associated with advantages such as greater knowledge about the company and lower turnover rates, Mercer noted.
Mr Narale said: "If managed properly, diversity of age at work can serve to improve productivity and reduce the need for governments to tax corporates and the next generation to support the elderly."